Global Debt Hits Record $338 Trillion, Sparking Alarm

The global economy is facing an unprecedented challenge: global debt reached a record level of 338 trillion dollars in the second half of 2025. This figure was recorded after a sharp increase of 21 trillion dollars in the first six months of the year, which raises serious concerns about global financial stability.

In the context of this huge debt accumulation, Japan's example is particularly noteworthy. As the country with the largest debt burden among developed countries, at about 260% of GDP, Japan demonstrates the complexities that central banks face. Such a level of debt makes it almost impossible for the Bank of Japan (BOJ) to raise interest rates, as such a move could be disastrous for the economy.

Japan has been stuck in a policy of "quantitative easing" (QE) for about 25 years, which was initially applied as a temporary measure to stimulate the economy. While the US, the UK, and the Eurozone countries were able to exit this program, Japan remains its captive. In 2018, the Bank of Japan's balance sheet already exceeded the country's annual gross product of 4.2 trillion dollars, which was unprecedented for the ten largest economies. This explains why the Governor of the Bank of Japan, Kazuo Ueda, was forced to stop the cycle of raising interest rates.

The debt problem, of course, is not only Japanese, but has a global nature. In recent weeks, investors have feared that the United Kingdom or France may need the help of the International Monetary Fund due to the uncontrolled growth in the cost of borrowing. At the same time, the US national debt has exceeded 37 trillion dollars.

Experts note that Japan has become a vivid example of how a developed economy can lose the ability to grow without external stimuli. This situation shows that the ability of central banks to manage the economy through interest rates is gradually being limited by the unprecedented level of debt. The global economy has entered a dangerous phase where the huge debt burden threatens to undermine financial stability and economic growth prospects.