• Global debt surged to a record $338 trillion in the second quarter of 2025, a nearly $7.5 trillion increase since the start of the year.
  • The debt-to-GDP ratio remains elevated at over 235%, with public sector borrowing outpacing private debt growth in many advanced economies.
  • Sustainable debt issuance has slumped by more than 30% year-over-year, signaling a sharp pullback in climate and ESG-focused finance.

Unrelenting Climb

Global indebtedness climbed to an unprecedented $338 trillion in Q2 2025, according to the latest Institute of International Finance (IIF) Global Debt Monitor, confirming a trend that has policymakers and investors on alert. The figure, which has also been cited in recent IMF analyses, represents an increase of nearly $7.5 trillion in just the first six months of the year, following a $7 trillion rise throughout 2024.

While the aggregate number is staggering, the composition of the debt buildup reveals diverging pressures. Strong government borrowing, particularly in major economies and some emerging markets, has been the primary engine of growth. This has pushed public debt higher at a faster clip than private debt in several advanced economies. In China, however, the increase is largely attributed to the non-financial corporate sector, a notable development given the ongoing weakness in its property market.

Sustainability Stalls

A striking feature of the current debt landscape is the sharp deceleration in sustainable finance. Issuance of green, social, sustainability, and sustainability-linked (GSSS) bonds has fallen by more than 30% compared to the previous year. This slowdown points to a significant loss of momentum in climate and sustainable finance initiatives, even as the physical impacts of climate change intensify. Market volatility and a shift in investor priorities appear to be key factors behind the retreat.

Efforts to reach the IIF for further comment on the slowdown were not immediately successful. The data suggests that the high cost of capital and macroeconomic uncertainty are crowding out longer-term environmental, social, and governance (ESG) considerations for many borrowers.

A Heavy Burden

The global debt-to-GDP ratio, a key metric for assessing sustainability, remains stubbornly high at over 235%. This is significantly above pre-pandemic levels, though it sits below the peak reached during the height of the COVID-19 crisis in 2020. The persistence of this elevated ratio indicates that debt is growing faster than the world’s economic output, raising concerns about future growth prospects and debt servicing capacity, especially in developing nations.

Analysts at both the IIF and the IMF have repeatedly highlighted the growing systemic risks. They point to the urgent need for coordinated international policy responses to avert potential debt distress events, particularly in vulnerable low-income economies that face a toxic mix of high borrowing costs and weak growth.

Without a significant shift in fiscal discipline or a surge in economic productivity, the weight of this record debt is likely to constrain policy options and increase financial fragility for the foreseeable future.