The Organization for Economic Cooperation and Development (OECD) warned against the rise of private debt loads in both advanced and developing economies, which pose a risk to growth as Canada, South Korea and the UK lead the world in household borrowing.
“Household and corporate debt in many advanced and emerging market economies is high,” the OECD said Thursday in a pre-released section of a report to be presented next week, Bloomberg reported.
It also warned that the high levels of indebtedness increase the vulnerability to shocks. While the global economy is showing its most rapid growth since the financial crisis, debt levels and credit quality are among the risks that could could trigger a downturn.
According to data, the consumer debt tops 100 percent of gross domestic product in Canada, with South Korea and Britain both above 80 percent.
On corporate borrowing, the OECD warned about a shift in risk from banks to the bond market and a “substantial” decrease in credit quality.