Impact of Growing Debt on Share Market

Given the personal debt, business debt and government debt, what is the long term impact of such a growing debt on our optimism regarding the share market?

In other words, given the size of the Australian economy (GDP), is this debt 150% to 200% of GDP, sustainable?

When there is  downturn, will Australia be more severely impacted because of this relatively high debt level compared to other countries?

Thanks

 

 

 

A: Thanks for the question.

I  am not an economist – but I don’t lose any sleep over this stuff.

It is not the size of the debt – but the ability to service the interest that counts.

Sure, in a downturn that hurts growth and probably the demand for commodities. Australia will be more impacted than some other countries.

That said, If you want some external validation – why do each of S&P, Moodys and Fitch assign Australian sovereign  debt  a AAA rating?


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