Global debt hits record of near $353 trillion, with signs of move away from US
Global Debt Trends and Shifting Investment Patterns
By Karin Strohecker
LONDON, May 6 (Reuters) - Investors are showing signs of diversifying away from U.S. Treasuries as global debt levels hit a record of nearly $353 trillion by end-March, a report by the Institute of International Finance published on Wednesday found.
Changing Demand for Government Bonds
IIF's quarterly Global Debt Monitor said that strengthening international demand for Japanese and European government bonds contrasted with broadly stable demand for U.S. Treasuries since the start of the year.
Investor Diversification and U.S. Treasuries
"This highlights that there are some efforts by international investors diversifying away from U.S. Treasuries," Emre Tiftik, director at the IIF for Global Markets and Policy said during a webinar to discuss the report.
Long-term Risks for U.S. Debt
While there was "no immediate risk" in the $30 trillion U.S. Treasury market, long-term projections suggested U.S. government debt increasingly looked to be on an "unsustainable path", he said, whereas debt ratios for the euro zone and Japan were now edging down.
Debt-to-GDP Ratio and Corporate Bond Markets
Under current policies, the U.S. debt-to-GDP ratio is expected to continue rising, the report said, while U.S. corporate bond markets continued to boom, supported by AI-related issuance and strong overseas inflows.
Rising Debt Levels Across the Globe
RISING DEBT LEVELS
U.S. and China as Key Drivers
Washington's borrowing push was one of the main drivers for global debt to rise by over $4.4 trillion in the first quarter, the fastest increase since mid‑2025 and the fifth straight quarterly increase, the IIF report said.
Tiftik said the rise in U.S. debt had been largely driven by government borrowing.
He also pointed to a sharp acceleration in debt at the start of the year by Chinese non-financial corporate borrowers - predominantly state-owned firms - which significantly outpaced borrowing by the country's government.
Debt Trends in Mature and Emerging Markets
Outside the world's two biggest economies, debt across mature markets edged lower, while emerging markets, excluding China, saw levels rising modestly to a record $36.8 trillion driven by government borrowing.
Looking at key debt ratios, global debt stood at 305% of world economic output, broadly stable where it had been since 2023. However, debt ratios followed a similar pattern as debt levels - trending lower in mature markets and rising steadily in emerging economies.
Countries with the Largest Debt Increases
Overall, the biggest increases over that period were recorded in Norway, Kuwait, China, Bahrain, and Saudi Arabia - each recording gains of more than 30 percentage points of GDP, the IIF report showed.
Outlook and Structural Pressures
The IIF predicted that structural pressures - including aging populations, rising spending on defense, energy security and diversification, cybersecurity and AI-related capital expenditure - would push both government and corporate debt levels higher over the medium- to long-term.
Geopolitical and Economic Factors
"The recent conflict in the Middle East is set to further intensify some of these pressures," Tiftik said.
(Reporting by Karin Strohecker, additional reporting by Marc Jones; Editing by Dhara Ranasinghe and Tomasz Janowski)
