Global debt has soared by $57 trillion since the outbreak of the financial crisis in 2007, with the debt to GDP ratio jumping to 400 percent in Japan. This raises questions about financial stability and poses a threat of another crisis.
“After the 2008 financial crisis and the longest and deepest global recession since World War II, it was widely expected that the world’s economies would deleverage. It has not happened. Instead, debt continues to grow in nearly all countries, in both absolute terms and relative to GDP. This creates fresh risks in some countries and limits growth prospects in many,” according to new research carried out by consultants McKinsey in 47 countries.
The amount of world debt reached $199 trillion at the end of 2014, with the growth rate exceeding the pace of global economic expansion and the debt to GDP ratio increased from 269 to 286 percent.
“Higher levels of debt pose questions about financial stability and whether some countries face the risk of a crisis.”.. see more