Global Debt Surpasses $365 Trillion as G7 Interest Payments Rise to Highest Since 2008
nashnova research
Global debt has surpassed $365 trillion, a new record, while G7 borrowing costs have climbed to their highest since mid-2008 — interest payments alone now exceed $3.3 trillion a year, more than the world spends on AI, squeezing fiscal space across advanced economies.
$365 trillion in debt — who is doing all the borrowing?
The Institute of International Finance (IIF) reports global debt has risen for six consecutive quarters, topping $365 trillion.
The figure spans four sectors — governments, households, financial institutions, and non-financial corporates — across more than 100 economies.
China and the U.S. are the main sources of new debt. This means → the world's two largest economies are leveraging up at the same time, concentrating risk.
$3.3 trillion in interest — how big is that number?
G7 annual interest payments have jumped roughly 85% from prior levels, reaching $3.3 trillion.
For comparison: global AI spending is about $2.6 trillion, defense spending about $3.1 trillion, and clean-energy spending about $2.3 trillion — interest costs exceed every one of them.
In plain terms = advanced economies now spend more each year just servicing old debt than the entire world invests in AI. Money consumed by interest is money unavailable for the future.
New borrowing halved — so why are interest costs still climbing?
Global debt grew by just over $10 trillion in H1 2026, less than half the $21 trillion added in the same period of 2025.
High rates, rising energy prices, and the Iran conflict all weighed on borrowing. Emerging markets drove $6.5 trillion of the increase; advanced-economy accumulation slowed sharply.
This means → even though less new debt is being issued, maturing bonds are being rolled over at much higher coupon rates, so total interest keeps rising. Put simply = borrowing less ≠ lighter burden — the refinancing cost of existing debt is locked in at elevated rates.
Debt-to-GDP is falling — does that mean real deleveraging?
Global debt sits at roughly 310% of GDP, about 25 percentage points below its early-2021 peak.
But the IIF notes this improvement is largely because inflation inflated nominal GDP — not because debt actually shrank. This means → once inflation eases and nominal GDP growth slows, the ratio will snap back up.
In plain terms = the denominator (GDP) was "inflated away"; the numerator (debt) barely moved. It is an inflation illusion, not genuine deleveraging.
Rollover risk moves to center stage — what to watch next?
The U.S. 10-year Treasury yield has risen to its highest since 2007; the 30-year yield is at a nearly two-decade peak.
IIF global markets director Emre Tiftik has noted this debt expansion differs from crises like 2008 or COVID — it is not driven by an external shock but has structural characteristics.
This reflects a policy dilemma: high rates push up refinancing costs, yet the debt-to-GDP improvement depends on inflation staying elevated. Whether this tension can be resolved is the central test for sovereign-debt risk ahead.
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