According to the Institute of International Finance (IIF), total global debt rose by approximately $7.5 trillion in the first quarter of 2025—hitting an all‑time high of over $324 trillion. This quarterly spike was more than four times the average increase of $1.7 trillion since late 2022.
Major Drivers: China, France & Germany Lead the Surge
Countries contributing the most to this debt growth include China, France, and Germany. In contrast, nations such as Canada, the UAE, and Turkey saw net declines in debt levels during this period.
Emerging markets added over $3.5 trillion, reaching a record $106 trillion, with China alone accounting for more than $2 trillion of that increase. Even so, debt-to-GDP ratios in emerging markets excluding China fell to below 180%, while global debt-to-output stands just above 325%.
Emerging Markets at Record Vulnerability: 245% Debt-to-GDP
Emerging economies collectively reached a 245% debt-to-GDP ratio—a new high that signals growing fiscal strain and potential refinancing risk. China’s government debt is around 93% of GDP, with projections indicating it may reach 100% before year-end.
The Looming $26 Trillion Refinancing Challenge
IIF’s report warns of $7 trillion in redemptions due in emerging markets and approximately $19 trillion in developed economies through the end of 2025—raising concerns about rollover risks and potentially higher yields. Reuters
What It Means for Markets and Policymakers
- Asset Vulnerability: With global debt at such scale, markets could be susceptible to shocks as investors reassess risk and liquidity.
- Increased Bond Vigilance: Some issuers may encounter pressure from bond markets if deficits remain unchecked.
- Fiscal Fragility: Governments face rising interest burdens at a time of heightened political and trade uncertainty, particularly in the U.S., potentially fueling inflation or destabilizing markets.
Summary
Global debt surged to $324 trillion in Q1 2025, driven largely by China, France, and Germany. Emerging markets reached a record 245% debt-to-GDP ratio, while the global ratio held above 325%. With massive refinancing requirements looming and inflationary pressures rising, analysts warn of increasing financial stress—especially in emerging economies.
