Global debt surged by over $12 trillion in the first three quarters of 2024 to a record high of nearly $323 trillion, according to the latest Global Debt Monitor report from the Washington-based Institute of International Finance (IIF).
Debt in emerging markets is fast approaching a fresh high of $105 trillion — 245% of GDP — up from $99 trillion in Q4 of 2023.
Looking to 2025 and beyond, the report said global debt is projected to soar, driven by government borrowing.
“Government debt levels are projected to climb more than a third by 2028, nearing $130 trillion'” said the report.
“If emissions reductions targets are fully met, climate-and nature related spending for net-zero goals could add an additional $38 trillion …
“Rising trade tensions and supply-chain disruptions threaten global economic growth, increasing the likelihood of mini boom- bust cycles in sovereign debt markets as inflationary pressures resurface and public finances tighten.”
The report said declining borrowing costs and narrowing sovereign and corporate spreads supported this rapid accumulation of debt, particularly in the third quarter.
“In fact, the rise in global debt during Q3 2024 marked the third-largest quarterly increase on record, following sharp surges during Q2 and Q4 of 2020, when the COVID-19 pandemic drove increases of over $11 trillion in global debt in each quarter,” said the report.
“A key driver of this recent borrowing has been U.S. exceptionalism and strength in GDP growth, which has bolstered global risk sentiment and contributed to the slow (but steady) decline in global debt-to-GDP. At around 326%, the global debt ratio is now over 30 percentage points lower than its all-time high at the peak of the pandemic in 2020.
“However, not all countries have seen substantive declines in debt ratios. Greece and Türkiye experienced notable decreases in total debt ratios, while Hungary, Ireland, Nigeria, Sweden, and Brazil recorded the largest increases during the first three quarters of 2024.
“Outside the financial sector, the rise was sharper in Nigeria, China, and Mexico, largely driven by government borrowing, which accounted for around 40% of the global debt build-up this year.”
Global government debt levels are projected to approach $130 trillion by 2028 — around 35% higher than the current level of around $95 trillion.
“Moreover, given the chronic underestimation of actual government spending needs in official public debt statistics, debt levels could rise even higher, particularly when accounting for the climate-related spending required to stay on track with net-zero targets and national climate commitments,” said the IIF.
“Under such a scenario, global government debt levels could reach $170 trillion by 2028, with emerging markets expected to record a sharp build-up in external debt as global efforts to mobilize $1.3 trillion of external funding annually to emerging markets by 2035 gain momentum following COP29 in Baku.”