According to the quarterly “Global Debt Monitor” report, the rise in international demand for Japanese and European government bonds contrasts with the generally stable demand for US Treasury bonds since the beginning of the year.
“This highlights that there are some efforts by international investors to diversify their investments away from US Treasuries,” said Emre Tevetic, director of the Institute’s Department of Global Markets and Policy, during a symposium to discuss the report.
He explained that there is no “immediate risk” in the US Treasury bond market worth $30 trillion, but he pointed out that long-term expectations make the path of US government debt appear increasingly “unsustainable”, in contrast to the trend of declining debt ratios in the Eurozone and Japan.
The report stated that, under current policies, the debt-to-GDP ratio in the United States is expected to continue to rise, while US corporate bond markets remain active, supported by artificial intelligence-related issuances and strong external flows.
US borrowing was one of the most prominent reasons for the rise in global debt by more than $4.4 trillion in the first quarter, which is the fastest rise since mid-2025 and the fifth consecutive quarterly increase.
Tiftik said that the rise in American debt is largely due to government borrowing, pointing also to a clear acceleration in the debt of Chinese non-financial companies, most of which are state-owned, in a way that exceeded the Chinese government’s borrowing.
Outside of the world’s two largest economies, developed market debt fell slightly, while emerging market debt, excluding China, rose to a record level of $36.8 trillion, driven by government borrowing.
Global debt reached about 305% of global economic output, a relatively stable level since 2023, but the trends remained varied between a decline in developed markets and a gradual rise in emerging economies.
Norway, Kuwait, China, Bahrain, and Saudi Arabia recorded the largest increases during the period, with increases exceeding 30 percentage points of GDP.
The institute expects that pressures such as population aging, increased defense spending, energy security, cybersecurity, and investments related to artificial intelligence will push the debts of governments and companies to rise further in the medium and long term.
“The recent conflict in the Middle East” is expected to intensify some of these pressures, Teftik said.
