GLOBAL DEBT
Consumption-fuelled government liabilities a ratings agency red flag
South African business is a notable exception to rapid increase in debt among emerging-market corporates
The world economy is the most indebted it has yet been despite the lessons learnt during the global financial market crisis. Yet South African government debt is not especially high as a ratio of GDP compared with many other countries. But the credit ratings agencies have become increasingly concerned about the pace at which South African government debt has increased in recent years, coupled with the fact that a very significant portion of the debt has been used to fund consumption spending rather than infrastructural development. In comparison, at the end of 2016, world debt totalled a staggering $215-trillion, or 325%, of world GDP, according to data provided by the Institute of International Finance. That is equivalent to debt of almost $30,000 for every person on the planet. This estimate of world debt, which includes governments, households as well as all corporates ( financial and nonfinancial) has risen drastically in the past 20 years. In 1996, world debt totalled just $63-...
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