Global debt rose to a record $307.4 trillion in the third quarter and the debt-to-output ratio in emerging markets hit a record high, the Institute of International Finance said on Thursday.

The financial services trade group estimates that global debt will reach $310 trillion by the end of this year, an increase of more than 25% in five years, and warns that a shift towards political populism could push debt even further next year.

“As 2024 approaches, a series of elections and ongoing geopolitical tensions raise concerns about increased government borrowing and fiscal discipline, including those of India, South Africa, Pakistan and the United States,” the organization said.

“If the next election leads to populist policies aimed at managing social tensions, the impact could be more government borrowing and less fiscal discipline.”

Two-thirds of the increase in debt in the last quarter came from developed countries, led by the United States, Japan, France and Britain. Developing countries such as China, India, Brazil and Mexico also showed strong increases.

Although the global debt-to-GDP ratio remained stable, the global debt-to-GDP ratio reached 255% – 32 percentage points higher than in the same period five years ago – led by Russia, China, Saudi Arabia and Malaysia.

The IIF said public debt saw its biggest increase in the third quarter, and added that budget deficits in many countries remained well above pre-pandemic levels.

However, the IIF warned that the debt burden on households and businesses in major countries including China and the United States was still increasing, impacting everything from elections to the green energy transition.

“With corporate lending at its lowest point in recent years, funding conditions continuing to tighten and geo-economic fragmentation increasing, the outlook for climate finance has appeared increasingly risky in recent quarters, as evidenced by the sharp decline in ESG debt issuance,” the report said.