By Mark McSherry
Total global debt rose by more than $21 trillion in the first half of 2025, reaching a record high of nearly $338 trillion in the second quarter of the year, according to the latest Global Debt Monitor report from the Washington-based Institute of International Finance (IIF).
The rise in debt in H1 2025 was concentrated in government debt and non-financial corporates, with borrowing by high-yield borrowers particularly prominent in the United States.
The IIF said borrowing needs in many advanced economies remain well above pre-pandemic levels, with no signs of any meaningful reversal.
“The scale of this increase was comparable to the surge seen in H2 2020, when pandemic-related policy responses drove an unprecedented buildup in global debt,” said the IIF.
“Easing global financial conditions — supported by a softer U.S. dollar and a more accommodative stance from major central banks — including the ECB, BoE, PBoC, and SNB — have been key drivers of the increase this year.
“A valuation effect from the dollar’s sharp depreciation (down 9% in H1) against major trading partners has further inflated the USD value of out- standing debt for many non-USD borrowers. Meanwhile, bank lending in mature markets has strengthened notably in recent quarters, while bond issuance activity has remained ro- bust across regions and sectors.
“China, France, the U.S., Germany, the UK, and Japan recorded the largest increases in debt levels in USD terms.
“By sector, the rise in H1 2025 was concentrated in government debt and non-financial corporates, with borrowing by high-yield issuers particularly strong in the U.S.
“As a share of GDP, the total global debt ratio continued to edge lower in the first half of the year, slipping below 324%.
“How-ever, sectoral trends diverged: government debt ratios climbed further, approaching 98% of GDP, while private sector debt ratios declined.
“At the country level, the sharpest increases in total debt ratios were recorded in Canada, China, Saudi Arabia, and Poland. By contrast, Ireland, Japan, and Norway saw notable declines in debt/GDP.”
The report said that with rising fiscal strains in mature markets, investors need to “watch out for the bond vigilantes.”
The IIF said: “While government debt ratios rose sharply across emerging markets in H1 — most notably in Chile and China — market reaction has been stronger in mature markets this year.
“Borrowing needs in many advanced economies remain well above pre-pandemic levels, with no signs of a meaningful reversal.
“Rising populism, combined with frequent cabinet reshuffles and government turnover, has made it increasingly difficult for policymakers to take the tough decisions needed to correct course on rising government debt in recent years.”