Global debt has surged almost US$29 trillion, to a record $348 trillion in 2025, according to the Institute of International Finance.
The IIF said that governments’ investments in national security were the main drivers behind the $28.8 trillion rise.
Spending on AI and similar technology also contributed greatly to the biggest annual increase in global debt since the Covid-19 pandemic.
The data also showed that, as a share of output, global debt ratios declined for a fifth consecutive year to around 308 per cent of GDP.
The debt-to-GDP ratio is seen as an important indicator of borrowers’ capacity to honour their obligations.
The increase was also primarily driven by governments, which accounted for more than $10 trillion of the rise.
The United States, China and the euro area were responsible for around three-quarters of the jump.
According to the data, the global debt cycle is driven less by households or companies and more by persistent fiscal deficits in major economies.
Government debt stood at around $106.7 trillion at the end of the year, up from $96.3 trillion.
In comparison, non-financial corporate debt reached around $100.6 trillion, and household liabilities rose more moderately to $64.6 trillion.
Global debt edged lower to about 308% of GDP in 2025, according to the report, driven mainly by advanced economies.
Debt ratios in emerging markets continue to climb and reached a record 235% GDP in 2025.
Total debt reached around $231.7 trillion in mature markets and $116.6 trillion in emerging markets. These were both fresh record highs.
A mix of defence-driven fiscal expansion, lower interest rates and lighter touch regulation of the financial sector could drive a greater build-up in debt in the coming years, the IIF warned.
