IIF reports emerging market debt rises $6.5T to over $110T in first half of 2026

Emerging market debt swelled by $6.5 trillion in the first half of 2026, pushing the total past $110 trillion. China, unsurprisingly, was the primary engine behind the increase.

The figures come from the Institute of International Finance’s latest Global Debt Monitor, published on September 23, 2026. The report paints a picture of a world borrowing at a pace that would make a credit card company blush, with global debt now exceeding $365 trillion.

The numbers in context

To appreciate the scale here, consider that global debt stood at nearly $353 trillion by the end of Q1 2026. That means the world added over $12 trillion in obligations in roughly six months, with emerging markets responsible for the lion’s share of that increase.

One figure that might seem reassuring at first glance: global debt-to-GDP ratios have held steady at around 305%. But this stability is less a sign of fiscal health and more a mathematical artifact. Higher inflation has boosted nominal GDP figures, which makes the ratio look manageable even as absolute debt levels climb to record territory.

The IIF was explicit in its warning that this apparent plateau in debt-to-GDP could be masking deeper vulnerabilities. Government borrowing in both China and the United States represents a particular concern, as fiscal deficits remain elevated in the world’s two largest economies.

Why EM debt matters beyond borders

EM credit spreads, the premium investors demand to hold developing-market bonds over safer alternatives, have hovered near historical lows during parts of the year. Access to international capital markets has remained resilient for emerging economies. Governments and corporations in developing countries have been able to issue bonds and secure financing without the kind of friction that typically accompanies debt loads of this magnitude.

China’s dominance in the EM debt figures deserves particular scrutiny. The country’s local government financing vehicles, its sprawling property sector obligations, and its central government borrowing combine to form a debt profile that dwarfs most other emerging markets.

Global debt’s quiet record-breaking streak

The IIF’s Global Debt Monitor tracks sectoral indebtedness across households, non-financial corporations, financial institutions, and governments. The latest edition shows that government debt remains the fastest-growing category, a shift from earlier decades when corporate and household borrowing drove much of the increase.

The United States and China together represent the two largest contributors to global government debt accumulation.

For investors navigating these waters, the IIF’s report suggests a paradox. EM assets remain accessible and attractively priced by historical standards, with low credit spreads offering entry points. But the underlying debt trajectory implies that this window of calm borrowing conditions could narrow if inflation decelerates, pushing debt-to-GDP ratios visibly higher and forcing a reassessment of sovereign risk across the developing world.