Global Debt Balloons to Record $348T as Government Spending Spree Accelerates

The world’s favorite growth strategy lately has been putting everything on the tab. Global debt jumped $29T to a record $348T in 2025, the sharpest yearly increase since the pandemic. The Institute of International Finance (IIF) estimates governments drove most of the surge, led by the US, China, and Europe.

• Developing countries face a $9T refinancing challenge in 2026, while advanced economies confront $20T in maturing debt.
• While global debt-to-GDP ratios declined to 308%, emerging markets hit a record-breaking 235% threshold.

Leverage spiral: With global growth projected at just 3.3% in 2026, debt is rising faster than the economy is expanding. The IIF warns that “easier financial conditions should support efforts to mobilize much-needed capital for national priorities, including defense finance,” but cautions about “rising leverage and overheating in parts of the market.” If governments keep spending at current levels without stronger growth to offset the burden, the world’s balance sheet could become increasingly fragile.