Friday, January 15, 2010

Deleveraging Lasts 6 to 7 Years: Early Drag On GDP: McKinsey & Co.

New McKinsey research shows that the challenge of reducing total debt levels relative to GDP is a global problem that is only just getting started. Leverage is still very high in some sectors of several countries, including the United States. History also shows that deleveraging episodes are painful—on average lasting six to seven years—and exert a significant drag on GDP growth in the early stages.
From "Deleveraging: Now the hard part: The challenge of managing the enormous debt burden weighing on global recovery is only just beginning" by Susan Lund, Charles Roxburgh, and Tony Wimmer in the January 2010, McKinsey Quarterly. Weblinks to the executive summary and the full report are available in the McKinsey Quarterly article.

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