The UAE’s government debt-to-GDP ratio fell to 31 per cent in the second quarter of 2026, down from 32.9 per cent in the same period last year. The decline came as total global debt surpassed $365 trillion, equivalent to about Dh1,339 trillion, reaching a new record.

According to the latest Global Debt Monitor report by the Institute of International Finance (IIF), debt levels in other sectors of the UAE economy increased despite the decline in the government debt ratio. Financial sector debt rose from 51.9 per cent to 55.8 per cent of GDP, non-financial corporate debt increased from 52.7 per cent to 53.6 per cent, and household debt climbed from 24.2 per cent to 25.8 per cent.

In Saudi Arabia, the government debt-to-GDP ratio increased from 28.9 per cent to 34.3 per cent over the same period. The Middle East average also rose from 32.3 per cent to 35.9 per cent, although government debt levels vary significantly across the region. The ratio was reported at 18.6 per cent in Kuwait and 150 per cent in Bahrain.

Globally, total debt increased by more than $10 trillion in the first half of 2026. Emerging markets accounted for the largest share of the rise, adding $6.5 trillion and taking their combined debt to more than $110 trillion.

The global debt-to-GDP ratio now stands at about 310 per cent, nearly 25 percentage points below the peak recorded in early 2021. However, the IIF warned that part of this relative decline reflects inflation-driven growth in nominal GDP and does not necessarily indicate a genuine reduction in the debt burden.

Rising financing costs have also become a major challenge for the global economy. According to the report, advanced economies paid more than $3.3 trillion in interest on internationally traded government bonds over the past year—more than the estimated global spending on defence, artificial intelligence or clean energy considered separately.