Global debt climbed to a record near $353 trillion at the end of March, driven largely by a surge in U.S. government borrowing and a sharp rise in Chinese corporate debt, the Institute of International Finance said on Wednesday — and investors are beginning to shift some of their holdings away from U.S. Treasuries toward Japanese and European government bonds.
The IIF’s quarterly Global Debt Monitor showed global debt rose by more than $4.4 trillion in the first quarter, the fastest quarterly increase since mid‑2025 and the fifth straight quarterly gain. Emre Tiftik, director for Global Markets and Policy at the IIF, said demand for Japanese and European sovereign debt has strengthened this year while demand for U.S. Treasuries has been broadly stable, signaling “some efforts by international investors diversifying away from U.S. Treasuries.” He added that, although the $30 trillion U.S. Treasury market posed “no immediate risk,” longer‑term projections increasingly point to an unsustainable trajectory for U.S. government debt under current policies.
Under those policies, the U.S. debt‑to‑GDP ratio is expected to continue rising, the report said, even as debt ratios in the euro zone and Japan have begun to edge down. U.S. corporate bond issuance, meanwhile, continues to boom — buoyed by AI‑related deals and strong overseas inflows — contributing to a dynamic where private sector credit markets are expanding even as public finances strain.
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China was a notable contributor to the first‑quarter jump: non‑financial corporate borrowing accelerated at the start of the year, with state‑owned enterprises accounting for much of the increase and outpacing government borrowing. Outside the United States and China, debt in mature markets eased slightly, while emerging markets excluding China recorded a modest rise to a record $36.8 trillion, led principally by government borrowing.
Measured against global economic output, total debt stood at about 305% of world GDP, a level broadly stable since 2023. Yet debt trajectories differ sharply by country: the IIF identified Norway, Kuwait, China, Bahrain and Saudi Arabia as the economies with the largest recent jumps in debt ratios, each rising by more than 30 percentage points of GDP over the period analyzed.
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Looking ahead, the IIF warned that structural pressures are likely to push both government and corporate debt higher over the medium to long term. Factors named in the report include aging populations, rising defense spending, efforts to bolster energy security and diversify energy sources, growing cybersecurity needs and elevated capital expenditure tied to artificial intelligence. Those forces, the IIF suggested, will shape borrowing patterns and investor demand across sovereign and corporate markets going forward.
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