China, US drive global debt to record $353 trillion as Iran war adds pressure: report
New report warns that rising conflicts, AI spending and energy security push are all expected to further increase global debt levels
Global debt hit a record high of nearly US$353 trillion in the first quarter, according to the Institute of International Finance (IIF), with a US$4.4 trillion rise from January to March, driven largely by government borrowing and marking the fastest increase since the second quarter of 2025.
“Over time, the longer-term implications are likely to become more apparent – prompting governments and corporates to prioritise supply chain resilience and forge new partnerships and trade routes,” they said in the report released on Wednesday and co-authored by Emre Tiftik, the institute’s global markets and policy director.
“These shifts carry significant fiscal implications, with meaningful consequences for interest rates and inflation dynamics.”
Higher interest rates make new borrowing more expensive and increase payments on some existing debt.
In China, state-owned enterprises were particularly active borrowers in the first quarter of the year, with levels that “significantly outpaced” those of sovereign institutions, according to the report. State-owned firms have historically benefited from relatively easy access to capital.