The world is now burdened with a staggering $315 trillion of debt, according to a recent report by the Institute of International Finance (IIF) shared by CNBC. 

This represents the largest, fastest, and most extensive rise in global debt since World War II, most driven by the economic impacts of the COVID-19 pandemic.

The report emphasizes that merging markets have played a major role in this surge, with their debt climbing to an unprecedented $105 trillion-$55 trillion more than a decade ago. This marks the second consecutive quarterly increase in global debt.

Meanwhile, emerging markets have seen their debt-to-GDP ratio rise to a record high of 257%, pushing the overall global ratio up for the first time in three years. China, India, and Mexico are the leading contributors to this increase.

Household debt, including mortgages, credit cards, and student loans, totals $59.1 trillion. Business debt totals $164.5 trillion, with the financial sector alone accounting for $70.4 trillion. Public debt comprises the remaining $91.4 trillion.

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Factors of Global Debt

The IIF also identified stubborn inflation, particularly in first-world countries such as the US, rising trade tensions, and geopolitical issues as risks to debt stability, potentially driving global funding costs higher than ever.

Mature economies, including Japan and the United States, account for about two-thirds of the total debt. Despite this, their debt-to-GDP ratios, which indicate a country's ability to service its debts, have been generally declining.

The IIF recognized that while healthy household balance sheets may offer some cushion against prolonged high interest rates, government budget deficits remain elevated compared to pre-pandemic levels.

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