The world is sinking deeper into debt, raising questions on whether financial markets that are already debt-heavy will have the appetite and ability to absorb growing demand for borrowing at a time of economic and political uncertainty.
It’s not just governments. Corporations and households are also sinking deeper into debt. Debt in both mature and emerging markets hit new records.
The figures were published by the Institute of International Finance (IIF) and, for the first time, include borrowing by the so-called frontier markets along with emerging markets. Nevertheless, it suggests that the underlying trends are concerning for markets.
Over US$26 trillion was added to global debt stockpiles in the first three quarters of this year, raising the total to an all-time high of nearly $346 trillion.
Mature markets added over $17 trillion of debt in the first nine months of 2025, driving their total to more than $230 trillion. The biggest increases were in the US, France, Germany and the UK.
Meanwhile, total debt in emerging markets reached a fresh high of more than $115 trillion by the third quarter, up by $5.5 trillion since the end of 2024, with the biggest increases in China, Brazil, Russia, Korea, Poland and Mexico.
“Most of the increase in debt remains concentrated in the US and China, and most of the overall rise came from mature markets, where debt accumulation has accelerated rapidly this year as key central banks ease policy,” the Washington-based IIF says in its latest Global Debt Monitor published on December 9.
It warns that US fiscal pressures could worsen materially if the Supreme Court rules against the wide-ranging tariffs on imports imposed under the International Emergency Economic Powers Act.
“This would have significant implications across asset markets, including gold prices, which have seen a substantial surge in demand as investors hedge against rising government interest expenses in the post pandemic era,” the report says.
“New corporate debt wave”
Global debt remains concentrated in the government sector, with China and the US again recording the biggest increases, followed by France, Italy and Brazil.
Global government borrowing surpassed the $100 trillion mark earlier this year, according to the IIF, whose members include many of the world’s leading financial institutions.
“With budget deficits still elevated – and the impact of large fiscal stimulus packages set to kick off in 2026 in Japan, the US, Germany, and China – sovereigns are likely to continue adding to their debt burdens and interest expenses. As a result, investor attention is increasingly shifting toward government bond auctions and government borrowing plans,” the report says.
Meanwhile, non-financial corporate debt is fast approaching $100 trillion, supported by easier funding conditions domestically and internationally.
The report notes that borrowing by artificial intelligence-linked and clean energy sectors in particular accelerated, a trend that it says is set to reshape global credit markets over the next several years. According to the IIF, a “new corporate debt wave is on the horizon”.
A weaker dollar has played a part in inflating the dollar value of debt for non-US borrowers.
Global household debt, meanwhile, rose about $4 trillion in the first nine months of the year to nearly $64 trillion. Most of the increase came from China, the US and Germany. However, the pace of increase was slower than gross domestic product, reducing the global household debt-to-GDP ratio to 57%, the lowest since 2015.
