Although debt-to-GDP ratios in advanced economies remain high by historical standards, they are at least on sustainable trajectories. Accordingly, fiscal austerity and household deleveraging appear to be at an end and will no longer be a drag on global growth. Debt in most emerging economies looks manageable too, with the key exception of China, where credit growth looks likely to slow sharply at some point.
This Focus is an expanded version of a presentation given at the Capital Economics Annual Conference, “Ten years after the financial crisis: Is the global economy finally back to health?” held in London, Amsterdam, Stockholm and Zurich in October 2017.
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