Debt is higher than before the global financial crisis, making the world vulnerable to economic and market shocks, S&P Global Ratings has warned.

Key points: The world's debt-to-GDP ratio rose from 208pc in June 2008 to 234pc in June 2018

The world's debt-to-GDP ratio rose from 208pc in June 2008 to 234pc in June 2018 Emerging markets now account for 31pc of global credit, more than double the proportion in 2008

Emerging markets now account for 31pc of global credit, more than double the proportion in 2008 Chinese companies make up two-fifths of the riskiest corporate debtors

The debt-to-GDP ratio of 234 per cent in June 2018 was considerably higher than 208 per cent in 2008.

But even though the debts are bigger, the big three credit ratings agency believes the risk of a major credit crunch and financial crisis is smaller.

"Global debt is certainly higher — and in many cases riskier — than a decade ago," the report warned.

"Nonetheless, the likelihood of a widespread investor exodus is contained.

"The increased debt is largely driven by advanced-economy sovereign borrowing and domestic-funded Chinese companies, thus mitigating contagion risk."

In absolute terms, the US led the increase in government debt, with an extra $US10.6 trillion in borrowings. China was next at $US5 trillion, and the eurozone borrowed $US2.8 trillion more.

However, on a debt-to-GDP basis, China grew its indebtedness by 71 per cent — albeit from a low base — the US by 60 per cent, and the eurozone by 45 per cent.

The ratings agency said it was not overly concerned about the increase in public debt because investor demand for it remained strong, despite those government debts now being a lot higher than they were back in 2008.

Chinese corporate debt binge

The overall increase in debt has been largely driven by Chinese corporations.

"Emerging markets now contribute 31 per cent of global credit, compared to 15 per cent in June 2008. This was largely driven by China," S&P noted.

Looking at almost 12,000 companies, S&P found 61 per cent of firms had "aggressive or highly leveraged" financial risk levels, up slightly from 58 per cent.

It warned that while defaults in recent years have been low, this could change.

"Chinese corporates now make up about two-fifths of the world's aggressive and highly leveraged debt," S&P observed.

"China has the highest-risk corporate sector among the major economies."

However, S&P is also relatively unconcerned about the build-up in Chinese corporate debt.

"The Chinese corporate debt build-up represents a very high credit risk, but a substantial portion of debt is owed by state-owned enterprises, China's economy remains centrally managed and the Government has levers to pull," it argued.

"Most Chinese debt is domestically sourced, implying a limited direct external contagion risk."

Other analysts, such as global real estate firm CBRE's chief economist Richard Barkham, are even more confident that Chinese authorities are already acting to stem last year's economic slowdown.

Mr Barkham described some recent analysis around the global economic slowdown as "a little bit overexaggerated".

"The US is in robust good health, China did slow in 2018 but it's stimulating again, so we think that will pick up, there is a little bit of a slowdown in Europe, but it seems to be associated with the auto sector, and we see a bounce back there," he told The Business.

S&P put the risk of a US recession over the next year between 20-25 per cent, an event that would undoubtedly shake global markets.