INSUBCONTINENT EXCLUSIVE:
particularly in the form of leveraged loans, has been on the rise for a number of years, with analysts suggesting the recent build up could
be a significant risk to global GDP growth.
Since 2015, world private sector debt has risen by around 15 per cent of world GDP - a level
higher than it was prior to the global financial crisis, according to Oxford Economics.
Emerging markets have been the main driver of this
trend with debt levels in major growing economies such as China increasing rapidly in the past decade.
Growing global debt is a major
concern for the world economy because recent evidence has indicated that credit booms often end in busts of seismic proportions
A recent study found that of 175 such credit booms a staggering 70 per cent have ended in busts, a worrying sign for the current debt
is in economies with risky household debt, according to the Oxford Economics note.
The boom in emerging market debt is coupled with a rise
in increasingly risky debt in Europe and the US
also suggests that the countries at the highest risk are Hong Kong, China, France, Canada, and Chile
China's debt problem is already at a critical stage and a failure to address it could have major implications for the world economy.
