Global debt rose for a fifth consecutive quarter in Q1 of 2026, increasing by more than $4.4 trillion to reach a record high of nearly $353 trillion, according to the latest Global Debt Monitor report from the Washington-based Institute of International Finance (IIF).
“This pace of accumulation marked the fastest increase since Q2 2025,” said the report.
“In absolute terms, the rise has been concentrated in China and the U.S., driven largely by government borrowing.
“A notable development in early 2026 was a sharp acceleration in debt accumulation by Chinese non-financial corporates — predominantly state-owned enterprises — which significantly outpaced sovereign borrowing in China.
“Outside these two economies, debt across mature markets edged lower, while total debt in emerging markets excluding China rose modestly to a record $36.8 trillion, with governments accounting for the bulk of the increase.
“As a share of GDP, global debt has remained broadly stable at around 305% since early 2023.
“Debt ratios continue to trend downward in mature markets while rising steadily in emerging markets.
“The most pronounced increases over this period were observed in Norway, Kuwait, China, Bahrain, and Saudi Arabia — each recording gains of more than 30 percentage points of GDP.”
Looking ahead, the report IIF said structural pressures — including aging populations, rising defense spending, energy security and diversification needs, cybersecurity, and AI-related capital expenditure — are expected to push government and corporate debt levels higher over the medium- to longterm.
The conflict in the Middle East is set to further intensify some of these pressures.
“In the near term, however, the trajectory of debt accumulation will depend significantly on developments in the region and the response of fiscal and monetary authorities,” said the IIF.
“Rising inflationary pressures — driven by higher energy and food prices — will compel many sovereigns, particularly energy importers, to mitigate the economic impact through fiscal support, leading to wider deficits, additional borrowing, and higher debt levels — especially in emerging markets with limited fiscal buffers.
“While higher inflation may temporarily help reduce debt ratios, the relief won’t be sustained if inflation becomes entrenched. If the Middle East conflict persists, prolonged price pressures will feed through to borrowing costs, particularly at the long end of the curve, even if central banks — increasingly constrained by rising public debt — do not act aggressively to rein in inflation.”