Global alert: the debt grew AU $ S324.3 billion in the first quarter and is already 325% of the world GDP

What else did the IIF analysts see at the close of the first quarter?

• Although the strong depreciation of the dollar against its main commercial partners contributed to the increase in the value of the debt in dollars, the increase in the first quarter quadrupled the average quarterly increase of US $ 1.7 billion observed since the end of 2022.

• The greatest contributions to the increase in debt in the first quarter of 2025 came from China, France and Germany, while debt levels decreased in Canada, United Arab Emirates and Türkiye. On the other hand, with a rebound in bond issuance, the increase was more pronounced among non -financial companies, followed by governments.

• The total debt in emerging markets increased by more than US $ 3.5 billion in the first quarter of 2025, reaching a new maximum of more than US $ 106 billion. This increase was mainly driven by China, which alone represented more than US $ 2 billion of the increase.

• Excluding China, the total emerging debt also reached a new maximum: Brazil, India and Poland experienced the highest increases in the value of dollars in the first quarter of 2025. However, the general debt/general ratio of emerging GDP (excluding China) decreased slightly, below 180%, and maintains more than 15 percentage points below its maximum of the first quarter of 2021 for the nominal growth of GDP as by some fiscal consolidation).

• Public indebtedness needs remain well above pre-pandemic levels, and the main economies, such as China and Germany, are expected to implement more expansive fiscal policies. “This change is partly due to concern for the decrease in commercial competitiveness and growing pressure to increase defense spending in a context of growing protectionism.”

• The greatest market volatility linked to tariff negotiations has had a limited impact on sovereign bonds of emerging markets compared to previous voltage episodes. In this sense, the depreciation of the dollar has provided some protection.

• The issuance of Eurobons by the sovereign issuers of emerging markets so far this year has been maintained, in line with the levels of 2024. However, if political uncertainty persists for a prolonged period, the fiscal policy could have to become increasingly expansive, especially in countries with strong commercial links with the US. It is feared that a new wave of public debt accumulation can be unleashed in affected countries.

• A particular concern is the trajectory of the US public debt, since the Trump government plans to extend the 2017 tax reductions and exempt others, so it is likely that the increase provided in the issuance of treasure bonds has a significant impact on global debt and credit markets, given the condition of the dollar as a reserve currency.

• A pronounced increase in the US Treasury bond offer would press the yields and significantly increase public spending on interest, which is already 3.1% of GDP. In such a scenario, the risk of inflation would also increase.

“In this complex context, which continues to exert persistent pressure on government balances, the increase in the term premium of the US treasure bonds does not surprise”points out the IIF. Therefore, it is likely that the attention of investors will be increasingly focused on the indebtedness plans of the Treasury, which could change unless new sources of income are ensured to finance the possible extension of the 2017 Tax Law.

“As observed in previous episodes of unexpected changes in the issuance of treasure bonds, including 2023 when the US accelerated short -term indebtedness more than expected, it is likely that greater volatility will be registered, especially given the important short speculative positions in US treasure bonds maintained by leverage investors.”