Austerity or growth?

World’s 20 Biggest Debtor Nations

from ThinkAdvisor,

McKinsey finds that little deleveraging has occurred; rather, debt-to-GDP ratios have generally gone up since 2007.

... the much discussed expectation was that the world, post-crisis, would be going through a period of deleveraging. But a new report by global consulting firm McKinsey & Co. reveals that that deleveraging has not happened; rather debt has continued to accumulate to ever-high levels, in both absolute and relative-to-GDP terms. The report, the third in a series by the McKinsey Global Institute since the onset of the 2008 financial crisis, is titled “Debt (and Not Much) Deleveraging,” and warns the world’s rising debt may add risk to global financial stability while potentially undermining economic growth. Specifically, global debt of $142 trillion in Q4 2007 rose to $199 trillion by Q2 2014. That $57 trillion increase, expressed relative to global GDP, represents a 17% higher debt level — from 269% to 286% of debt to GDP. Most of that debt expansion stemmed from government debt issuance, which rose to a compound annual growth rate of 9.3% in the period since the global financial crisis compared with pre-crisis debt growth of 5.8%. But households and the financial sector have also added to total debt (albeit at a lower rate than pre-crisis) while corporate debt has largely kept pace with pre-crisis levels. In its analysis, the McKinsey Global Institute looked at 47 countries — 22 advanced and 25 developing. Nearly all were leveraging rather than deleveraging. Only five countries studied have deleveraged since the global financial crisis — Israel by the most, having reduced its national debt by 22 percentage points.

Herewith the 20 countries with the highest current level of debt relative to GDP:

20. Malaysia 19. Austria

18. Hungary 16. United States

15. Finland

14. Norway

13. UK

12. Italy

11. France

10. Sweden

9. Denmark

8. Spain

7. Greece

6. Netherlands

5. Belgium

4. Portugal

3. Singapore

2. Ireland

1. Japan

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