Global debt rose to a record $247 trillion in the first quarter, more than $29 trillion higher than the end of 2016, according to an analysis by the Institute of International Finance. The debt-to-GDP ratio rose for the first time since the third quarter of 2016 but remains about four percentage points below the record high reached then, according to the IIF. The pace of the debt increase in the first quarter is a concern to the IIF as they note that the quality of the debt has declined, particularly in emerging markets.
- Non-financial corporate debt is now at record highs in Canada, France and Switzerland
- The government debt-to-GDP ratio has surged to 101 percent in the U.S.
- Financial sector indebtedness rose by $1.5 trillion to all-time high of $60.6 trillion
- Household indebtedness in China, Chile and Colombia grew over 3 percentage points since Q1 2017, topping 49%, 46% and 30%, respectively
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I wrote The End of Growth in the months following the Global Financial Crisis of 2007-2008 (the book was published in North America in 2011), with the goal of helping to put that crisis in proper perspective. I argued that persistent economic growth is not “normal” in either an ecological or a historical frame of reference, and that a major threat to the continuation of growth (such as was posed by the 2008 crisis) is best interpreted as a signal that the global economy is approaching inevitable growth limits as the larger ecological systems of which it is a part become depleted, degraded, and destabilized.
This is not an entirely new way of thinking about the economy. Starting in the 1960s, Nicholas Georgescu-Roegen, Kenneth Boulding, and Herman Daly laid the foundations for an economics that correctly situates human society within the context of Earth’s limited natural energy flows and resource stocks. In 1972, the landmark study The Limits to Growth argued that the rapid global economic expansion that began in the twentieth century would almost certainly end and reverse itself in the twenty-first due largely to resource depletion and pollution. These have remained minority views among economists for decades; however, I argued that they are well founded, and that we are now seeing the confirmation of Limits to Growth warnings.
However, three things have changed since The End of Growth first appeared in North America. There are clear signs that growth is becoming more difficult to achieve worldwide. Impacts from slowing growth are appearing in the social and political spheres. And both analysts and grassroots social movements are starting to regard growth as the cause, rather than the solution, to worsening ecological and social crises. Let’s explore these developments one by one.
Signs that growth has run its course. This book argues at some length that ongoing, annual global GDP growth is very nearly finished. However, the years since the 2008 crash have seen some semblance of “recovery,” in that growth, as conventionally measured, has revived. Is the book’s thesis thereby refuted? I would argue to the contrary. The effort required to achieve the “recovery” was truly astonishing. Trillions of dollars, euros, and yuan were created and spent by central banks to prop up the global financial system. More trillions were called into existence through government deficit spending. Some analysts point out that, in the U.S. at least, during the decade since 2008 the dollar amount of cumulative government deficit spending has exceeded the dollar amount of GDP growth.