Global growth is accelerating. But before we break out the champagne, we should acknowledge the long-term risks to sustained expansion posed by rising private and public debt.
Market analysts view the uptick in private lending in most emerging and some developed economies as a sign of higher demand and a precursor of faster growth. But, while this is true in the short run, the relentless rise of overall debt remains among the most serious problems burdening the global economy.
Despite years of deleveraging after the 2008 global financial crisis, debt remains very high — and yet we have now returned to an expansionary credit cycle. According to the Bank for International Settlements, total nonfinancial private and public debt amounts to almost 245 percent of global GDP, having risen from 210 percent before the financial crisis and around 190 percent at the end of 2001.