Global debt totals $353 trillion, 305% of global GDP, according to the Institute of International Finance (IIF). Rising energy and food prices increase pressure on public budgets and the cost of credit.
The Institute of International Finance (IIF) has published its bi-monthly report on global debt, which places total indebtedness at $353 trillion, equivalent to 305% of global GDP. This figure marks a new record and reflects the accumulated impact of years of low interest rates, fiscal stimuli, and, more recently, commodity inflation.
The document warns that the persistence of high energy and food prices, exacerbated by the conflict in the Middle East, is reducing the leeway for central banks to raise interest rates without worsening the burden of public debt. According to the IIF, markets could tighten financing conditions even without movements in monetary policy, pushing long-term rates higher.
Emerging market public debt rises to 74.6% of GDP
One focus of the report is the deterioration of public finances in emerging economies. Public debt in these countries has increased from 70.9% of GDP in the first quarter of 2025 to 74.6% in the January-March 2026 period. In Latin America, the increase has been from 65.7% to 67.3% in the same timeframe.
The IIF points out that these regions face a double vulnerability: less fiscal space to absorb external shocks and greater sensitivity to increases in the cost of external credit. The combination of high inflation and elevated interest rates could force governments to resort to new energy or food subsidies, further straining budgets.
Risk appetite remains, but capital reallocation is underway
Despite the record debt scenario, the IIF report detects a note of resilience: global risk appetite remains relatively firm, and credit spreads are holding near low levels, which has so far prevented wider contagion. However, portfolio managers have already begun diversifying their investments away from traditional US assets, seeking alternatives in other markets.
Capital reallocation is a phenomenon that the IIF considers nascent but relevant: if long-term rates continue to rise and sovereign debt from developed countries offers less leeway, international flows could change direction in the coming months. For Spanish and European investors, this presents both opportunities and risks, especially in fixed income and currencies.
The organisation, which brings together major banks and global asset managers, emphasises that the key will be the persistence of commodity inflation. If energy and food prices remain high throughout 2026, governments with little fiscal leeway—such as several in southern Europe and Latin America—could see their financing costs rise significantly.
In the short term, high inflation appears to reduce the debt-to-GDP ratio because the nominal denominator grows, but that effect fades if the price increase is not transitory. The IIF warns that the real volume of obligations remains high and very sensitive to any variation in financing costs.
For Spanish companies with international exposure, the report's message is clear: it is advisable to monitor three signals in the coming months: the evolution of energy and food prices, long-term interest rates, and the degree of deterioration of the fiscal space in the countries where they operate. The combination of these factors could alter credit conditions and capital allocation globally.
The next IIF report, due in two months, will provide an update on these figures and allow for an assessment of whether trends are consolidating or if signs of relief are emerging. For now, the warning is clear: global debt shows no signs of easing, and decisions made in the coming months will be crucial for financial stability.
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