Deleveraging, What Deleveraging? The 16th Geneva Report on the World Economy

"Contrary to widely held beliefs, the world has not yet begun to delever. Global debt-to-GDP is still growing, breaking new highs. Figure 1 shows the evolution of total debt (excluding the financial sector) for our global sample (advanced economies plus major emerging market economies). While there was a pause during 2008-09, the rise of the global debt-GDP ratio recommenced in 2010-2011.  Data in the report also show that debt-type external financing (leverage) continues to dominate equity-type financing (stock market capitalisation).

Figure 1. Global debt-to-GDP ratio, 2001-13

As Figure 2 shows, global debt accumulation was:

• Led by developed economies until 2008; but 
• Has been led by emerging economies since 2008; the sharp rise in Chinese debt is especially striking.

These emerging markets as a group are an important source of concern in terms of future debt trajectories. China and the so-called ‘fragile eight’ could find themselves in the unwanted role of ‘host’ to the next phase of the global leverage crisis."

at http://www.creditwritedowns.com/2014/09/deleveraging-deleveraging-16th-geneva-report-world-economy.html