The global economy’s recovery from the financial crisis may be at risk of failing - BIS

According to the quarterly review of  Bank for International Settlement, the global economy’s recovery from the financial crisis may be overly dependent on domestic consumption and at risk of failing.

Key highlights (via Bloomberg)

• The number of advanced economies in consumption-led expansions has increased in recent years
• Increasing shares of private consumption in gross domestic product can be a leading indicator of future growth slowdowns, especially if they are driven by a buildup of debt
• The increasing prevalence of consumption-led growth since 2012, therefore, presents new challenges for policymakers in several economies
• Policies that address the build-up of imbalances and strengthen investment are thus central in fostering sustainable growth
• High household debt service ratios tend to become a potent drag on economic growth, frequently leading to costly deleveraging processes