Global debt has once again reached a record high and is now approaching US$353 trillion, equivalent to around Rp6,125 quadrillion assuming an exchange rate of Rp17,355 per US dollar. Amid this surge, global investors have started showing signs of reducing their exposure to United States government bonds.

This was revealed in the quarterly Global Debt Monitor report released by the Institute of International Finance (IIF) on Wednesday local time.

The IIF noted growing international investor interest in Japanese and European government bonds, while demand for US government debt securities has remained relatively stagnant since the beginning of the year.

Quoted by Reuters on Thursday (7/5/2026), IIF Director of Global Markets and Policy Emre Tiftik said the trend partly reflects differing debt trajectories that are increasingly influencing investor allocation decisions.

According to Tiftik, US fiscal policy has become a major concern for the market. Under current policies, the ratio of US debt to gross domestic product (GDP) is expected to continue rising over the coming years.

He added that the latest projections from the Congressional Budget Office indicate a worsening long-term fiscal outlook for the United States.

This situation contrasts with the eurozone and Japan, which are considered to have more moderate debt ratio trajectories despite continuing fiscal expansion measures.

Even so, the US corporate bond market remains strong. The IIF stated that debt issuance linked to artificial intelligence (AI) development and continued foreign capital inflows are still supporting the market.

The report also revealed that global debt increased by more than US$4.4 trillion, or around Rp76,362 trillion, in the first quarter of 2026. This marked the fastest rise since mid-2025 and represented the fifth consecutive quarterly increase.

The IIF assessed that rising US government borrowing was one of the main drivers behind the increase in global debt. Apart from the United States, China also experienced a sharp rise in debt levels.

However, Tiftik emphasized that China’s debt surge mainly came from non-financial corporations, especially state-owned enterprises, and exceeded the increase in central government debt.

Outside the world’s two largest economies, debt levels in developed countries slightly declined. Meanwhile, emerging markets excluding China recorded a moderate increase, reaching a record US$36.8 trillion, or around Rp638,664 trillion, mainly driven by government borrowing.

Overall, the global debt-to-output ratio now stands at 305% of world economic output. The figure has remained relatively stable since 2023, although debt movement patterns differ between developed and developing economies.

The IIF noted that the largest increases in debt ratios occurred in Norway, Kuwait, China, Bahrain, and Saudi Arabia, with each country experiencing increases of more than 30 percentage points relative to GDP.

Looking ahead, the IIF predicts structural pressures will continue driving both government and corporate debt higher over the medium and long term. Contributing factors include aging populations, rising defense spending, energy diversification, cybersecurity demands, and large-scale investment in AI.

Tiftik also stated that the recent conflict in the Middle East is expected to further intensify several of these pressures.