Global debt tops $365 trillion as China, US lead borrowing surge

Global debt reached a staggering $365 trillion in the first half of the year, with China and the United States driving the majority of the increase, according to the Institute of International Finance's (IIF) latest Global Debt Monitor report. This figure represents the sixth consecutive quarterly rise in global debt and marks a significant milestone in fiscal sustainability concerns.

Emre Tiftik, the IIF's director of global markets and policy, emphasized that this debt surge differs from previous cycles, which were triggered by specific crises like the 2008 financial crisis and the COVID-19 pandemic. Instead, the current debt wave is fueled by a super-cycle driven by healthcare, energy, AI, and IT, as well as defense-related spending.

The spending is predicted to be structural rather than cyclical, making debt a long-term reality. While global debt expanded by $10 trillion in the first six months of 2026, it fell short of the $13 trillion increase recorded in the same period last year, owing to higher borrowing costs and volatility stemming from the Iran war.

China contributed $4.8 trillion of this new borrowing, driving its total debt to $72.5 trillion, while the US saw a $3.5 trillion increase to $111.8 trillion. Federal debt in the US reached 122.3% of GDP in the second quarter, surpassing $40 trillion for the first time. Market reactions to structural pressures, including rising servicing costs, could intensify dollar demand scrutiny and potentially elevate long-term Treasury yields.