Global debt climbs $7 tn to record $318 tn, IIF says

Global debt climbed by $7 trillion last year to a record annual high of $318 trillion as economic growth slowed, data from the Institute of International Finance (IIF) showed on Wednesday.

The annual increase in global debt in 2024 was less than half of the $16 trillion added in 2023, when hopes of US Federal Reserve interest rate cuts led to a borrowing surge, Reuters said, adding that the “so-called bond vigilantes could punish governments if rising fiscal deficits persist.”

“Bond vigilantes” is the the term given to investors who push up interest rates in a bid to force policymakers to rein in budget deficits and debt.

“The increasing scrutiny of fiscal balances — particularly in countries with highly polarized political landscapes — has been a defining feature of recent years,” the IIF said in its report, titled Global Debt Monitor: Return of the Bond Vigilantes – Dangerous Dynamics in Debt Markets.

Total debt as a share of gross domestic product rose for the first time in four years as growth slowed, the group that represents the global financial industry said.

Borrowing will stay high in 2025, especially in India, China, France, the US, and Brazil.

The IIF has forecasted a slower pace of overall borrowing this year, given the uncertain outlook.

“With global economic policy uncertainty at record highs — exceeding levels seen at the peak of the pandemic — and borrowing costs still elevated, the more cautious stance among borrowers is likely to hinder private sector demand for credit,” it said.