A country is bust when the markets decide.
Our long-term Investment Megatrends
Last Stages of the Debt Supercycle
Debt supercycles are very long in nature – on average about 60 years. The current supercycle began as World War II ended and much reconstruction was required. In the early stages of all debt supercycles, GDP and debt grow 1:1. That ratio declines as the supercycle matures and, towards the end of all debt supercycles, GDP only grows about $0.25 for every dollar of added debt. China and the US, the two economic superpowers of the world, are both there now.
As more and more debt is added to ensure continued GDP growth, more and more capital is deployed to service that debt, i.e. capital that ideally should be deployed productively is increasingly used to service existing debt, and that holds back productivity gains and economic growth. This is the most important reason why productivity growth declines towards then end of all debt supercycles.
As part of our commitment to responsible investing, we are signatories of the UN PRI and have linked this megatrend to the following UN Sustainable Development Goals: