Global debt surpasses $337 trillion amid rising risks from borrowing and military spending

Global debt has reached a new record of $337.7 trillion (approximately 10,000 trillion baht) by the end of the second quarter of 2025, driven by relaxed monetary policies and a weaker US dollar. According to Reuters, the increase reflects looser global financial conditions and accommodative policies by major central banks, according to a quarterly report released on Thursday.

The Institute of International Finance (IIF) reported that global debt rose by over $21 trillion (approximately 675 trillion baht) in the first half of the year, bringing total debt to $337.7 trillion.

The countries with the largest increases in dollar-denominated debt include China, France, the US, Germany, the UK, and Japan, partly due to the depreciation of the US dollar. Since the start of the year, the dollar has weakened 9.75% against a basket of major trading currencies.

The IIF’s Global Debt Monitor notes that the scale of this rise is comparable to the surge in the second half of 2020, when COVID-19 containment measures triggered unprecedented debt accumulation worldwide.

Examining debt-to-GDP ratios, which measure the ability to service debt relative to economic output, the largest increases were seen in Canada, China, Saudi Arabia, and Poland, while Ireland, Japan, and Norway saw declines. Overall, the global debt-to-output ratio has fallen slightly to just above 324%. In emerging markets, however, the ratio has surged to a new record of 242.4%, with total debt in these markets rising by $3.4 trillion (around 100 trillion baht) in Q2, reaching a record $109 trillion (around 3,500 trillion baht).

Emre Tiftik, Director of Sustainable Research at the IIF, noted that rising military spending is placing further pressure on government finances amid heightened geopolitical tensions. He highlighted that the increase in debt is primarily government debt, which has surged in the G7 countries and China.

Tiftik added that bond markets have reacted more sharply in developed economies, with 10-year G7 government bond yields approaching their highest levels since 2011.

The IIF also reported that emerging markets are facing record redemptions of bonds and loans, totalling nearly $3.2 trillion for the remainder of 2025.

The report warns that fiscal stress could intensify in countries such as Japan, Germany, and France, and cautions about potential “sovereign bond sell-offs” if these nations are perceived as fiscally unstable.

Regarding the US, short-term borrowing accounts for around 20% of total debt and 80% of Treasury issuance, raising the risk of political pressure on the Federal Reserve to maintain low interest rates, which could compromise the independence of monetary policy.