Record global debt and a weak dollar: how it affects the economy
26 September 00:35
Global global debt reached a record high of $337.7 trillion at the end of the second quarter, driven by easing global financial conditions, a weaker US dollar and a more accommodative stance by major central banks. This was reported by "Komersant Ukrainian" with reference to Reuters.
According to the Institute of International Finance (IIF), global debt increased by more than $21 trillion in the first half of 2025 to $337.7 trillion.
The largest increase in debt in dollar terms was observed in China, France, the United States, Germany, the United Kingdom, and Japan, partly due to the weaker dollar, which lost 9.75% since the beginning of the year against a basket of major trading partners.
Debt growth is comparable to the pandemic period
According to the IIF, the scale of the debt increase is comparable to the second half of 2020, when governments’ response to the pandemic caused a record increase in the global debt burden.
“The magnitude of this increase was comparable to the growth seen in the second half of 2020, when policy responses to the pandemic led to an unprecedented accumulation of global debt,” the Global Debt Monitor report says.
Debt to GDP: who is growing the most
If we look at the debt-to-GDP ratio (an indicator of the ability to repay debt compared to output), the sharpest growth was observed in Canada, China, Saudi Arabia, and Poland. According to the report, this ratio decreased in Ireland, Japan, and Norway.
In general, the global debt-to-gross domestic product ratio is gradually declining, now slightly above 324%.
In developing countries, this indicator reached a new record of 242.4%, and total debt in the second quarter increased by $3.4 trillion, exceeding $109 trillion.
The impact of military spending and geopolitics
Emre Tiftik, Director of Sustainable Development Research at the IIF, noted that rising military spending and the aggravation of the geopolitical situation put additional pressure on government budgets. The main increase in debt is observed in the public sector, especially in the G7 countries and China.
At the same time, the bond market in developed economies is showing a tighter reaction: the yield on 10-year G7 bonds is approaching its highest level since 2011.
Risks for markets and investors
Developing countries face a record amount of debt servicing – nearly $3.2 trillion in bonds and loans over the remainder of 2025.
The IIF report also warns of risks for Japan, Germany, and France, in particular from so-called “bond watchdogs” – investors who can sell bonds of countries with unstable finances en masse.
In the United States, about 20% of debt is short-term, which creates additional political pressure on the central bank to maintain low rates and may threaten monetary policy independence.
