Global debt has reached unprecedented levels, surpassing $250 trillion in 2024 and continuing to rise into 2025. This surge is driven by a combination of factors including lingering effects of the COVID-19 pandemic, increased government spending on defense amid geopolitical tensions, and fiscal policies aimed at stimulating economic growth in the face of sluggish recovery[1][2][4].
One major reason for the rise in global debt is the extensive fiscal response to the COVID-19 pandemic. Governments worldwide increased borrowing to fund healthcare systems, provide economic stimulus packages, and support businesses and individuals affected by lockdowns and economic disruptions. This led to a sharp increase in public debt, which rose from 84 percent of global GDP in 2019 to about 93 percent in 2024[2][4]. While private debt has slightly decreased, public debt has grown significantly, reflecting the heavy borrowing by governments to manage the crisis and its aftermath[4].
Advanced economies carry the largest share of global debt. Countries like the United States, Japan, France, and the United Kingdom dominate the debt landscape due to their long-standing reliance on borrowing to finance consumption, social welfare programs, and infrastructure projects. The United States alone accounts for nearly 39 percent of the global non-household debt market, with government and institutional debt totaling approximately $58.8 trillion in early 2025[1][3]. Japan and China follow, with China holding the second-largest debt burden globally, reflecting its rapid economic growth and extensive borrowing to fuel development[1][3].
Emerging markets face a complex challenge. While they need to borrow to finance growth and development, they are vulnerable to shifts in global interest rates and investor sentiment. High borrowing costs and the risk of capital flight make managing debt levels more difficult for these economies. Brazil is notable as the only Latin American country among the top ten most indebted nations, highlighting regional disparities in debt accumulation[1].
Geopolitical tensions and rising defense budgets also contribute to the debt increase. Countries are allocating more resources to military spending in response to global uncertainties, which adds to fiscal pressures and borrowing needs. This trend is particularly evident in advanced economies but also affects emerging markets that seek to maintain security and stability[1].
Corporate debt has also expanded, with global corporate debt instruments rated by S&P Global Ratings increasing by 5.5 percent in the year leading up to mid-2025. This reflects ongoing borrowing by businesses to finance operations, investments, and expansions despite economic uncertainties[5].
The overall debt-to-GDP ratio remains elevated, stabilizing just above 235 percent globally, which is higher than pre-pandemic levels. This ratio indicates that the total amount of debt exceeds twice the size of the global economy, underscoring the scale of indebtedness worldwide[2][4].
In summary, the unprecedented rise in global debt results from a combination of pandemic-related fiscal measures, geopolitical factors, economic stimulus efforts, and long-term borrowing trends in both public and private sectors. The concentration of debt in advanced economies, the challenges faced by emerging markets, and the ongoing growth of corporate debt all contribute to this complex and evolving financial landscape[1][2][3][4][5].