We might be sitting on a $2,600,000,000,000,000 bomb
A McKinsey Global Institute report warns that global wealth growth is increasingly driven by paper gains and asset valuations rather than real economic productivity. The analysis highlights concerns over high corporate debt and the detachment of financial markets from the underlying global economy.
Why it matters
The report suggests that the global financial system may be vulnerable to corrections if asset valuations continue to outpace actual economic growth.
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Share A A A Global wealth is booming, but it is on increasingly shaky foundations.
Last week the McKinsey Global Institute issued its annual global balance sheet . It estimated that global wealth hit almost $US1.8 quadrillion ($2.6 quadrillion, with a quadrillion equalling a thousand trillion) last year. In 2024, it was $US1.7 quadrillion.
McKinsey’s annual report warned that increases in wealth are being driven by paper gains, rather than by real economic growth. AP While that might be regarded as an indicator of an increasingly prosperous world, McKinsey referred to the “mounting detachment” of the balance sheet from the global economy, with several asset classes growing further out of balance with the underlying growing economy.
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