Global Debt Reaches Record $318 Trillion, IIF Reports

The global debt stock reached a record $318 trillion in 2024, with an increase of $7 trillion, marking the first rise in the debt-to-GDP ratio since 2020 amid slowing economic growth, according to the Institute of International Finance (IIF). This increase in debt was significantly lower than the previous year's surge, attributed to expectations of interest rate cuts by the Federal Reserve. The IIF warned of potential repercussions from 'bond vigilantes' if fiscal deficits continue to rise, particularly in politically polarized countries. Emerging markets, including China, India, Saudi Arabia, and Turkey, contributed approximately 65% to this debt growth, with many facing the challenge of rolling over $8.2 trillion in debt this year. Despite anticipated high borrowing costs and economic uncertainty, the IIF forecasts a possible $5 trillion increase in government debt due to demands for fiscal stimulus. These trends raise concerns about the stability of global financial markets and the ability of certain nations to manage their growing debt burdens.