Global debt hit a record high of US$337.7 trillion (RM1,424 trillion) at the end of the second quarter, driven by easing global financial conditions, a softer US dollar and a more accommodative stance from major central banks, a quarterly report showed on Thursday.
The Institute of International Finance, a financial services trade group, said that global debt rose over US$21 trillion in the first half of the year to US$337.7 trillion.
China, France, the US, Germany, Britain, and Japan recorded the largest increases in debt levels in US dollar terms, though some of that was due to a waning dollar, the IIF found.
The US currency has weakened 9.75% since the start of the year against a basket of major trading partners.
“The scale of this increase was comparable to the surge seen in H2 2020, when pandemic-related policy responses drove an unprecedented buildup in global debt,” the IIF said in its Global Debt Monitor.
Looking at debt-to-GDP ratios — an indicator of the ability to repay debt by comparing to what is being produced — Canada, China, Saudi Arabia and Poland saw the sharpest increases. The ratio declined in Ireland, Japan, and Norway, the report found.
Overall, the global debt-to-output ratio continued to move slowly lower, standing just above 324%. However, in emerging markets the ratio hit 242.4% — a new record after a downward revision on the last report in May.
Total debt in emerging markets rose by US$3.4 trillion in the second quarter to a record high of more than US$109 trillion.
Emerging markets face a record high of nearly US$3.2 trillion in bond and loan redemptions in the remainder of 2025, the IIF said.
It warned that fiscal strains could intensify in countries such as Japan, Germany, and France, urging caution over so-called “bond vigilantes” — referring to investors who sell off bonds of countries whose finances they deem unsustainable.
Source: Theedgemalaysia