The UN Conference on Trade and Development (UNCTAD) says that global debt has risen sharply to $250 trillion.
This is three times the total world income meaning that the world's economy is on "shaky ground" due to extensive borrowing.
"The world economy is again under stress. The immediate pressures are building around escalating tariffs and volatile financial flows, but behind these threats to global stability is a wider failure - since 2008 - to address the inequities and imbalances of our hyper-globalized world," said Mukhisa Kituyi, UNCTAD Secretary-General.
This reality is overshadowed by escalating trade tariffs and an unpredictable financial climate dominated by debt-fuelled growth which is worse than a decade ago when the global financial crisis hit.
In 2008, the deficit was $140 trillion.
UNCTAD Director of Globalization and Development Strategy division Richard Kozul-Wright says that private and corporate debt is behind this surge in borrowing. However, the borrowing has not been used to invest in businesses, such that "growing indebtedness observed globally is closely linked to rising inequality.
He warns that the excessive reliance on debt in the current global economy will not end well for many economies.
The outlook for the US is still grim with Wright saying that the little recovery is an economic sugar-rush driven by tax cuts and military spending.
The US economy has outperformed most of Europe, where growth is "softening" across the continent with UNCTAD saying that Japan had also shown a "rather weak performance" that has been echoed in a significant number of larger emerging economies threatened by recession.
Other countries, especially the bigger emerging economies which rely on commodity exports - Russia and the four BRICS countries: Brazil, India, China and South Africa, can expect some improvement as long as prices remain firm.
The report says that economic storm clouds are gathering for many other developing economies where their share of global debt rose from 7 per cent in 2007, to 26 per cent this year.
These developing economies could be even further threatened by any serious escalation of tariff hikes imposed by the US, China and the Eurozone.
"Over 50 per cent of world trade is run through 1 per cent of corporations. Big firms have been a major source of inequalities. It's about the growing power of monopolies and concentrated markets," says Wright.
A sign of China's prolific growth is its growing share of exports in the BRICS group of nations, which rose from 5 per cent in 1990, to more than 20 per cent by 2016, UNCTAD says.
The UN report warns of potential economic decline in the near future saying there is an urgent need for governments to work together on global policy coordination to better manage the multilateral trading system.