• Although there are multiple takes on the global economic outlook, there is a single determining factor upon which that outlook hinges: the world suffers from over-indebtedness and needs to cure its addiction to credit. According to a recent McKinsey report, global debt has increased by $56tr since 2007, far outpacing economic growth. With very few exceptions, leverage has increased around the world: total global debt now amounts to 286% of global GDP, versus 269% on the eve of the great recession.
• There is a fixation with the level of indebtedness, but when assessing debt vulnerability, it is the rate of change that matters the most. On this scale, China appears as one of the most vulnerable countries. Its ratios of corporate and private debts to GDP have risen by an astonishing 70 percentage points between 2007 and 2014.
• On the upside, there is evidence that the reflationary effect of lower oil prices is starting to work in energy-importing countries. In particular, consumers in the Eurozone (EZ) are spending more, not deferring purchases, as would be expected in deflationary conditions. The EZ is technically in deflation, but the dreaded deflationary mind-set has not yet kicked in.

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