In 2025, the global ratio of government debt to gross domestic product (GDP) has climbed by 2.3 percentage points, reaching 94.7%. Although this marks an increase, it remains below the peak ratio of 98.7% that was recorded during the height of the COVID-19 pandemic in 2020. This measurement reflects the total government indebtedness compared to economic output and is a key indicator of fiscal health across nations.
Japan continues to hold the unenviable position of the country with the highest government debt relative to its GDP, standing at an extraordinary 230%. Sudan follows closely behind with 222%, and Singapore is the third most indebted with 176%. These figures highlight the severe fiscal challenges these nations face. Japan’s substantial debt has been driven by prolonged economic stagnation and an aging population requiring extensive social spending, while Sudan’s figures are impacted by ongoing conflicts and economic instability.
China has experienced the largest rise among the major economies, with its debt-to-GDP ratio increasing by eight percentage points to reach 96%. This sharp increase signals the country’s growing fiscal obligations amid stimulus measures and economic adjustments. The United States also remains highly indebted, with a ratio of 123%, reflecting years of government spending increases aimed at countering economic downturns and crises.
Among developed nations, Germany boasts the lowest government debt-to-GDP ratio at 65%, with projections indicating this could dip further to 58% by 2029, reflecting stronger fiscal discipline. Other developed economies with notably high debt levels include Italy, Bahrain, and Singapore, each facing unique economic pressures driving their debt accumulation.
Elevated government debt levels often arise from aggressive fiscal policies, economic slowdowns, and unexpected shocks such as recessions or pandemics, which require substantial public spending. While borrowing can support economic recovery, sustained and excessive debt might dampen growth, cause currency challenges, and in extreme cases, threaten sovereign creditworthiness.
Some countries, like the U.S. and Japan, benefit from issuing debt in their own currencies, granting them more flexibility in managing repayment risks. However, with rising interest rates globally, even these nations face increasing costs to service their debt.
This evolving landscape of government debt underscores the complex balance policymakers must strike to support economies without compromising long-term fiscal sustainability.
