Global debt hits USD 353 trillion, is the US starting to lose favour?

JAKARTA — Global debt surged to a new record approaching USD 353 trillion at the end of March 2026, amid growing investor concerns over United States assets.

As reported by Reuters, the latest report from the Institute of International Finance (IIF) showed investors are beginning to shift funds from US government bonds, or Treasuries, towards Japanese and European debt securities.

In its quarterly Global Debt Monitor report released on Wednesday, the IIF said international demand for Japanese and European government bonds has strengthened steadily since the start of the year. By contrast, demand for US government bonds has remained broadly stagnant.

In the first quarter, global debt increased by USD 4.4 trillion, marking the fastest rise since mid-2025 and extending the increase in global debt to a fifth consecutive quarter.

IIF economist Emre Tiftik said the rise in US debt was largely driven by aggressive government borrowing.

At the same time, China also recorded a sharp increase in non-financial corporate debt, particularly among state-owned enterprises, which expanded much faster than government borrowing.

Outside the world’s two largest economies, debt levels in advanced economies have begun to decline. However, emerging markets excluding China recorded a new debt high of USD 36.8 trillion, driven by government borrowing.

Globally, the debt-to-gross domestic product (GDP) ratio stood at 305%, broadly stable since 2023.

Nevertheless, debt ratio trends are diverging sharply. Advanced economies have begun reducing their debt ratios, while emerging markets continue to see increases.

The IIF noted the largest rises in debt-to-GDP ratios were recorded in Norway, Kuwait, China, Bahrain and Saudi Arabia, each increasing by more than 30 percentage points of GDP.

Looking ahead, the IIF expects structural pressures to continue driving increases in both government and corporate debt globally.

Much of this is due to ageing populations, rising defence spending, energy security needs, cyber security reinforcement, and investment in artificial intelligence (AI).

“The recent conflict in the Middle East is expected to further intensify some of these pressures,” Tiftik said. (DH/KR/ZH)