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(Bloomberg) -- The global economy’s recovery from the financial crisis may be overly dependent on domestic consumption and at risk of failing, according to the Bank for International Settlements.

In its quarterly review, the organization said the number of advanced economies in consumption-led expansions has increased in recent years. In addition to generally being weaker than other forms of growth, this type can also sow the seeds of future slumps. This is particularly the case if they are driven by a buildup of debt, as happened prior to the crisis in 2008.

“Increasing shares of private consumption in gross domestic product can be a leading indicator of future growth slowdowns,” BIS economists Enisse Kharroubi and Emanuel Kohlscheen said in the BIS report published on Monday. “High household debt service ratios tend to become a potent drag on economic growth, frequently leading to costly deleveraging processes.”

One of the drivers of consumption in recent years has been monetary stimulus since 2008, with the European Central Bank and others cutting interest rates below zero or implementing massive bond-buying programs. That extraordinary stimulus has also fueled talk that central banks are fueling the next asset-price bubble.

“The increasing prevalence of consumption-led growth since 2012 therefore presents new challenges for policymakers in several economies,” Kharroubi and Kohlscheen said. “Policies that address the build-up of imbalances and strengthen investment are thus central in fostering sustainable growth.”

To contact the reporter on this story: Fergal O'Brien in London at fobrien@bloomberg.net.

To contact the editors responsible for this story: Craig Stirling at cstirling1@bloomberg.net, Zoe Schneeweiss, Brian Swint

©2017 Bloomberg L.P.

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