{"id":15870,"date":"2026-07-27T15:26:44","date_gmt":"2026-07-27T12:26:44","guid":{"rendered":""},"modified":"2026-07-27T15:26:44","modified_gmt":"2026-07-27T12:26:44","slug":"global-balance-sheet-hits-1-8-trillion-as-asset-values-decouple-from-real-economic-output-mckinsey-report-says","status":"publish","type":"post","link":"https:\/\/harici.com.tr\/en\/global-balance-sheet-hits-1-8-trillion-as-asset-values-decouple-from-real-economic-output-mckinsey-report-says\/","title":{"rendered":"Global balance sheet hits $1.8 trillion as asset values decouple from real economic output, McKinsey report says"},"content":{"rendered":"<p>The global economic balance sheet reached approximately 1.8 quadrillion (1,800 trillion) in 2025, rising from $1.7 quadrillion in 2024.<\/p>\n<p>According to a <span style=\"color: #0000ff;\"><a style=\"color: #0000ff;\" href=\"https:\/\/www.mckinsey.com\/mgi\/our-research\/the-global-balance-sheet-2026-imbalance-and-divergence\">report<\/a><\/span> published by McKinsey, the world is wealthier than ever before. However, this wealth relies on increasingly inflated valuations of paper assets rather than real output. How this contradiction resolves itself will determine the future of the world\u2019s leading economies, the report stated.<\/p>\n<p>The report noted that several asset classes have further expanded their imbalance with the &#8220;underlying&#8221; economy. This dynamic heightens the probability of corrections occurring through inflation, asset valuation losses, or, in the best-case scenario, productivity gains.<\/p>\n<p>Unlike growth in the capital stock that generates real output, the tendency to rely on elevated valuations fuels the risk of a painful correction\u2014either through falling asset prices or prolonged inflation.<\/p>\n<p>Nevertheless, a more optimistic scenario exists in which the world essentially grows into these high asset valuations, supported by an artificial intelligence-driven productivity boom.<\/p>\n<p>Researchers found that global household wealth reached $570 trillion, representing a $40 trillion increase compared to 2025.<\/p>\n<p>Yet only 20% of this increase stemmed from genuine capital accumulation\u2014namely net new investments in machinery and equipment, housing and buildings, infrastructure, and intellectual property.<\/p>\n<p>The remainder was driven by a combination of inflation and price appreciation in the market value of existing assets.<\/p>\n<p>In the US and Canada, equity values served as the primary driver of wealth expansion. In China, France, and Germany, paper wealth declined under the weight of falling real estate prices. In the UK and Japan, inflation pushed asset values higher.<\/p>\n<p>This marks a more extreme iteration of a long-standing trend: from 2000 to 2024, net investments accounted for 30% of global wealth growth.<\/p>\n<p>Examining the structure from the baseline up, real assets encompass real estate, infrastructure, machinery and equipment, and intellectual property owned by households, governments, and corporations. These carry a combined value of $620 trillion and constitute global net assets across all sectors.<\/p>\n<p>Financial assets held outside the financial sector include equities, bonds, loans, foreign currency and deposits, and pension funds. Every financial asset carries a corresponding liability, and these balance each other out on a global level.<\/p>\n<p>This &#8220;financial layer&#8221; functions to separate wealth from asset ownership and stood close to the total value of real assets.<\/p>\n<p>The financial sector, meanwhile, intermediates between these financial assets and liabilities. With a volume of $550 trillion, the financial sector has reached 90% of the value of real assets.<\/p>\n<p>Wealth is ultimately the balancing item on balance sheets, equaling the difference between total assets and liabilities. This stood at $600 trillion in 2025.<\/p>\n<p>In 2025, the growing detachment of balance sheets from the real economy was driven by the world&#8217;s two largest economies.<\/p>\n<p>With the share of corporate profits in GDP doubling since 2000, US equity valuations rose to 2.4 times the net asset value of corporations.<\/p>\n<p>In China, corporate debt reached 80% of real assets, compared to a global average of 50%.<\/p>\n<p>US public debt is hovering near all-time highs, while the fastest increase was recorded in China.<\/p>\n<p>On a global scale, a major share of corporate and household debt, as well as real estate assets, approached 25-year averages relative to GDP.<\/p>\n<p>Inflation contributed to this normalization; however, values remain well above pre-2000 levels. Against a backdrop of flat investment, the ratio of productive assets to GDP remained stagnant.<\/p>\n<p>Jan Mischke, a partner at the McKinsey Global Institute, <span style=\"color: #0000ff;\"><a style=\"color: #0000ff;\" href=\"https:\/\/www.axios.com\/2026\/07\/24\/world-economy-wealth-mckinsey\">told<\/a><\/span> Axios: &#8220;We can now say that every asset on this planet has been financialized.&#8221;<\/p>\n<p>There are several plausible paths through which these elevated asset valuations could uncoil. One is a simple &#8220;muddle through&#8221; approach: low growth leads to low interest rates, which allows high valuations to persist. This is roughly what occurred in major economies during the 2010s.<\/p>\n<p>However, more dramatic possibilities exist\u2014some positive, others alarming.<\/p>\n<p>The best-case scenario for the global economy involves a productivity leap driven by AI or other sources that sparks a GDP boom, thereby justifying the high valuations of equities and other asset classes. This is essentially what occurred in the late 1990s.<\/p>\n<p>A more pessimistic possibility is that sustained inflationary pressure erodes the real value of assets, forcing them back toward historical norms and leaving people poorer in real terms. This occurred, arguably, during 2021\u20132022.<\/p>\n<p>The most concerning scenario is a global asset price reset of the kind witnessed in 2002 and 2008.<\/p>\n<p>&#8220;Overstretched scenarios have a tendency to mean-revert, including in positive ways like productivity acceleration,&#8221; Mischke said. &#8220;But occasionally, you also get a major debt crisis or a market crash.&#8221;<\/p>\n<p>Arvind Govindarajan, one of the co-authors of the report, posed the central question: &#8220;For us in the US, the real question is: Will productivity and GDP be higher\u2014in which case we see a productivity boost\u2014or will we slide into an inflationary scenario?&#8221;<\/p>\n<p>Entering 2026, major economies followed diverging roadmaps, according to the report. The US operated under a &#8220;productivity acceleration&#8221; scenario, though high public debt and stretched equities keep the possibility of &#8220;persistent inflation&#8221; or a &#8220;balance sheet reset&#8221; on the table.<\/p>\n<p>Europe drifted toward &#8220;secular stagnation,&#8221; as sluggish demand pulled down growth and interest rates.<\/p>\n<p>In China, while a partial balance sheet reset unfolded amid falling real estate values, public spending and corporate investment continued to support balance sheet growth.<\/p>\n<p><!-- notionvc: b0f4339f-a899-43f9-852e-5892fe1e3042 --><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The global economic balance sheet reached approximately 1.8 quadrillion (1,800 trillion) in 2025, rising from $1.7 quadrillion in 2024. According to a report published by McKinsey, the world is wealthier than ever before. However, this wealth relies on increasingly inflated valuations of paper assets rather than real output. How this contradiction resolves itself will determine [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":15871,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"ep_exclude_from_search":false,"footnotes":""},"categories":[176],"tags":[2122,20647,20641,20648,1664,20645,20644,9382,10206,1251,2394,1850,20640,503,20643,917,4051,20646,20639,1855,12884,20642,8030,1131],"class_list":["post-15870","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-america","tag-artificial-intelligence","tag-arvind-govindarajan","tag-balance-sheet","tag-capital-investment","tag-chinese-economy","tag-corporate-debt","tag-equity-valuations","tag-european-economy","tag-financial-assets","tag-financial-crisis","tag-financialization","tag-gdp","tag-global-wealth","tag-headline","tag-household-wealth","tag-inflation","tag-interest-rates","tag-jan-mischke","tag-mckinsey-global-institute","tag-productivity","tag-public-debt","tag-real-assets","tag-real-estate-market","tag-us-economy"],"yoast_head":"<!-- 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