Investors are bracing for higher interest rates around the world, but the extent of the rises, and the effects on individual economies, will vary markedly. This is because the debt in each of the major economic zones – US, Europe, China and Japan – is distributed quite differently across the government, corporate and household sectors.

The world is drowning in debt. On average, total debt levels sit at between 250 and 350 per cent of gross domestic product, with a few outliers such as Japan. Australia’s gross debt is relatively low compared to peers.