NEW YORK, Sept 19 Reuters Global debt hit a record 307 trillion in the second quarter of the year despite rising interest rates curbing bank credit, with markets such as the United States and Japan driving the rise, the Institute of International Finance IIF said on Tuesday.

The financial services trade group said in a report that global debt in dollar terms had risen by 10 trillion in the first half of 2023 and by 100 trillion over the past decade.

It said the latest increase has lifted the global debttoGDP ratio for a second straight quarter to 336. Prior to 2023, the debt ratio had been declining for seven quarters.

Slower growth, alongside a deceleration in price increases, were behind the debt ratio rise, the report said.

The sudden rise in inflation was the main factor behind the sharp decline in debt ratio over the past two years, the IIF said, adding that with wage and price pressures moderating, even if not to their targets, they expect the debt to output ratio to surpass 337 by yearend.

More than 80 of the latest debt build up had come from the developed world with the U.S., Japan, Britain and France registering the largest increases. Among emerging markets, the biggest rises came from the largest economies, namely China, India, and Brazil.

As higher rates and higher debt levels push government interest expenses higher, domestic debt strains are set to increase, the IIF said.

The report found that household debttoGDP in emerging markets was still…