Resilience in a time of high debt

PRE-RELEASE OF THE SPECIAL CHAPTER OF THE OECD ECONOMIC OUTLOOK

November 2017

Key messages

Private sector indebtedness is at historically high levels
• Private debt has remained high since the crisis in advanced economies (AEs), it increased in emerging market economies (EMEs)
• Bond markets expanded, international debt issuance rose, credit quality decreased
• Household debt is linked to an upsurge in house prices in some AEs and EMEs

High debt can entail financial risks and erode medium-term growth
• As financial conditions tighten, rollover and debt service risk are high
• Highly indebted households and lenders are vulnerable to real estate price reversals
• Heavily indebted firms can become “zombies”, lowering productivity

Policies to enhance resilience and to improve growth are needed
• Address macroprudential policies to financial risk, but without penalising growth
• Focus policies to reduce bias toward home ownership and to increase housing supply
• Reduce debt bias in corporate taxation and help development of equity markets
• Improve insolvency regimes to promote dynamism and bank health

Fuente: OECD

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Economía Internacional