Analysis · Credit & Finance

Which Countries Look Like 2008? The Credit Gap Map Says None of Them

We ranked 44 economies on the BIS credit-to-GDP gap — the canonical banking-crisis early-warning indicator. In Q4 2007, 17 countries were above the +10pp red line. In Q4 2025: zero. The risk has moved from credit growth to debt service, where Canada, Brazil, China and France sit near record burdens.

WorldPulse ResearchAugust 9, 2026

Countries above +10pp

0 / 44

Q4 2025 (BIS)

Countries above +10pp

17 / 43

Q4 2007 (BIS)

Highest gap today

+7.0pp

Saudi Arabia, Q4 2025

Ireland today

−82.1pp

was +47.7pp in Q4 2007

Canada debt service

25.4%

Q4 2025 — record since 1999

China debt service

18.8%

Q4 2025 — 98th percentile

Credit-to-GDP gaps and debt service ratios from the Bank for International Settlements, Q4 2025 quarterly release.

The short answer: nobody. The BIS credit-to-GDP gap — the indicator that flagged Ireland, Spain, Denmark and the United States before 2008, and the reference metric for Basel III countercyclical capital buffers — shows zero of 44 covered economies above the +10pp red line as of Q4 2025. At the end of 2007, seventeen countries were above it. Today the highest reading in the world is Saudi Arabia’s, at just +7.0pp. The red count has now been zero for seven straight quarters — since Q2 2024, the first such stretch in a BIS record with broad country coverage back to 1988.

That is not the same as saying nothing is wrong. The gap measures the pace of credit accumulation against trend. The cost of carrying the debt already accumulated tells a different story: BIS debt service ratios for Q4 2025 put Canada at a record 25.4% of income, Brazil at 29.2%, China at 18.8% and France at 20.8% — each in the top decile of its own history. The 2008 playbook was a credit-growth boom; the 2026 risk is a debt-carrying burden repriced by five years of higher rates.

1. The indicator that called 2008

The credit-to-GDP gap is the difference between private non-financial sector credit as a share of GDP and that ratio’s own long-run trend. BIS research found that gaps above roughly +10pp preceded about two-thirds of banking crises within three years, which is why Basel III uses the gap to guide countercyclical capital buffers (+2pp to +10pp is the amber zone).

It earned its reputation in 2007. BIS data for Q4 2007 put the gap at +47.7pp in Ireland, +42.8pp in Spain, +38.4pp in Denmark, +16.3pp in Portugal and +11.6pp in the United States — a nearly clean list of the economies whose banking systems broke in the following two years. The chart below shows the underlying credit-to-GDP ratios for four of them: the boom into 2008 and the long deleveraging since. One honest caveat: the gap was not infallible — the UK read only +5.8pp in Q4 2007 and its banks failed anyway, with the boom visible instead in a debt service ratio near 20% of income.

Total credit to the private non-financial sector, % of GDP

BIS quarterly series. The 2000s boom and the post-2008 deleveraging in the four canonical crisis economies.

2. The 2026 map: zero red, four amber

Here is the map as of the BIS Q4 2025 release, ranked by today’s gap. Not one country is in the red zone. Only four are even amber: Saudi Arabia (+7.0pp), Japan (+6.8pp), Argentina (+5.0pp) and Israel (+3.6pp). The former crisis economies are the mirror image of 2007: Ireland at −82.1pp, Spain at −26.8pp, the US at −11.5pp. China, whose +25.5pp gap in Q1 2016 was the biggest credit-boom signal of the 2010s, has unwound to −7.7pp.

Country	Credit gap Q4 2007 (pp)	Credit gap Q4 2025 (pp)	Debt service Q4 2025 (%)	DSR percentile (own history)	Real house prices YoY, Q3 2025 (%)
Saudi Arabia	+4.5	+7.0	—	—	—
Japan	-12.6	+6.8	15.5	73th	+1.2
Argentina	-11.6	+5.0	—	—	—
Israel	-2.6	+3.6	—	—	-2.1
Brazil	0.0	+1.8	29.2	98th	-0.4
India	+17.0	+1.7	12.2	58th	+0.5
China	-9.2	-7.7	18.8	98th	-5.3
South Korea	-0.7	-8.0	19.6	79th	-1.6
United States	+11.6	-11.5	14.1	7th	-1.6
Norway	+15.2	-13.6	28.1	94th	+1.5
France	+4.4	-15.1	20.8	96th	-0.3
Canada	+1.8	-15.3	25.4	100th	-5.1
United Kingdom	+5.8	-17.8	13.1	5th	-1.2
Denmark	+38.4	-18.4	24.2	35th	+3.7
Spain	+42.8	-26.8	11.8	4th	+9.8
Turkey	+9.6	-26.9	26.9	91th	-0.8
Portugal	+16.3	-27.0	12.2	1th	+14.7
Sweden	+19.1	-38.5	24.6	89th	-0.4
Netherlands	-13.6	-52.5	25.9	1th	+4.6
Ireland	+47.7	-82.1	—	—	+5.2

Source: Bank for International Settlements (credit-to-GDP gaps, debt service ratios, residential property prices), Q4 2025 quarterly release; property momentum from the BIS real house price index, YoY as of Q3 2025. Red = gap above +10pp, amber = +2pp to +10pp (BIS early-warning convention). DSR percentile relative to each country’s 1999–2025 quarterly history. Luxembourg (+90.0pp in 2007, −69.5pp now) is omitted as a small-financial-centre outlier; 20 of 44 covered economies shown.

3. The closest things to a boom: Saudi Arabia and Japan

Saudi Arabia is the world’s fastest-rising credit gap: from +1.4pp in Q1 2024 to a peak of +7.6pp in Q3 2025, easing to +7.0pp in Q4 2025 on BIS data, as Vision 2030 megaprojects and a mortgage build-out push private credit well ahead of an oil-driven GDP denominator. It is still amber, not red — but it is the only large economy where the gap is climbing steeply.

Japan’s +6.8pp is stranger than it looks. The gap has been positive every quarter since Q3 2016 on BIS data — a decade-long, slow-burn credit expansion under zero rates, against a bubble-era peak of +23.8pp in Q1 1990. With the Bank of Japan now actually raising rates, Japan’s credit ratio near 180% of GDP is worth watching, though its debt service ratio (15.5% in Q4 2025, 73rd percentile) is far from alarm territory. Argentina’s +5.0pp is a rebound from a collapsed base after stabilisation, and Israel’s +3.6pp is wartime credit against soft GDP — neither resembles a classic boom.

Saudi Arabia: credit to private sector, % of GDP

BIS quarterly series. The Vision 2030-era climb behind the world’s highest credit gap (+7.0pp, Q4 2025).

Japan: credit to private sector, % of GDP

BIS quarterly series. A decade of positive credit gaps under zero rates (+6.8pp, Q4 2025).

4. The risk moved: debt service, not credit growth

The BIS itself cautions that a gap can normalise while the debt stays — and while the cost of carrying it rises. Its companion indicator, the debt service ratio (interest plus amortisation as a share of private-sector income), is where today’s stress actually shows. As of Q4 2025 BIS data, Canada’s DSR hit 25.4% — the highest ever recorded in a series that starts in 1999. Brazil is at 29.2% (98th percentile of its own history), China at 18.8% (98th, a whisker below its record), France at 20.8% (96th), Norway at 28.1% (94th) and Sweden at 24.6% (89th).

The symmetry with 2008 is almost perfect — in reverse. The economies that blew up then now carry the lightest burdens of their modern history: the Netherlands and Portugal sit at the 1st percentile of their own DSR records, Spain at the 4th, the UK at the 5th, the US at the 7th (Q4 2025, BIS). A decade and a half of deleveraging plus long-term fixed-rate debt insulated the old crisis club, while the countries that skipped 2008 — Canada, the Nordics, China, Brazil — kept borrowing into the rate shock, largely on floating or short-reset terms.

Debt service ratio, private non-financial sector, % of income

BIS quarterly series since 1999. Canada, Brazil, China and France are at or near their record debt-service burdens.

5. A housing boom without a credit boom

One more inversion of the 2008 pattern: the hottest housing markets in the advanced world are now the old crisis economies — real house prices rose 14.7% YoY in Portugal and 9.8% in Spain in Q3 2025 on the BIS real residential property index, with Ireland at +5.2% — while their credit gaps are 25pp or more below trend. This is a price boom running on supply shortage, foreign demand and equity rather than leverage. It can still hurt affordability, but it is not the bank-balance-sheet fuel of 2007. Where property is deflating — China at −5.3% and Canada at −5.1% YoY in Q3 2025 — it is doing so on top of record or near-record debt service burdens, which is the combination worth watching. (On China’s broader slowdown, see our real-activity cross-check.)

Real residential property prices, index

BIS real house price index (2010 = 100). The former crisis economies are booming again — without the credit.

The verdict: 2008 is not repeating — it inverted

On the indicator that defined the last crisis, the world has never looked safer in the BIS record: zero countries above the +10pp red line in Q4 2025, against 17 in Q4 2007. There is no Spain-2007, no Ireland-2007 — the nearest analogues, Saudi Arabia (+7.0pp) and Japan (+6.8pp), are mid-amber and idiosyncratic. Anyone claiming a 2008-style, credit-boom-driven banking crisis is imminent is arguing against the very indicator that called the last one.

But the same BIS data relocates the risk rather than retiring it. The vulnerable set is now defined by debt service: Canada at a record 25.4% of income, Brazil at 29.2%, China at 18.8% and France at 20.8% (Q4 2025) — countries that skipped the 2008 deleveraging and then met the rate shock. If stress comes, it should look less like a lending-boom bust and more like a slow debt-service squeeze on households and firms, in exactly the places the 2008 map marked green.

Frequently Asked Questions

What is the credit-to-GDP gap?

The credit-to-GDP gap is the difference between an economy’s ratio of private non-financial sector credit to GDP and that ratio’s own long-run trend, measured in percentage points. It is computed quarterly by the Bank for International Settlements and is the reference indicator for setting Basel III countercyclical capital buffers. In BIS early-warning research, a gap above roughly +10pp has historically preceded about two-thirds of banking crises within three years; readings of +2pp to +10pp are the amber zone.

Which countries have the highest credit-to-GDP gap today?

As of the BIS Q4 2025 data, the highest gaps are Saudi Arabia at +7.0pp, Japan at +6.8pp, Argentina at +5.0pp and Israel at +3.6pp. No country among the 44 the BIS covers is above the +10pp red line — compared with 17 countries at the end of 2007. Most large economies are deeply negative: the United States at −11.5pp, the United Kingdom at −17.8pp, Spain at −26.8pp and Ireland at −82.1pp.

Did the credit-to-GDP gap predict the 2008 financial crisis?

Largely yes, for the countries that suffered banking crises. At the end of 2007 the BIS gap stood at +47.7pp in Ireland, +42.8pp in Spain, +38.4pp in Denmark and +11.6pp in the United States — all well into or beyond the red zone, and all subsequently endured severe banking stress. It was not perfect: the United Kingdom’s gap was only +5.8pp in Q4 2007 even though its banks failed; the UK boom showed up instead in a debt service ratio near 20% of income.

What is the debt service ratio and why does it matter now?

The BIS debt service ratio (DSR) measures interest payments plus scheduled amortisation of the private non-financial sector as a share of income. Unlike the credit gap, it captures the effect of interest rates, so the post-2022 rate repricing pushed it to or near record highs in several economies even where credit is not booming: Canada at 25.4% (a record since the series began in 1999), Brazil at 29.2%, China at 18.8% and France at 20.8% as of Q4 2025 BIS data. BIS research finds the DSR is the better near-term crisis predictor, while the credit gap works at longer horizons.

Is a negative credit-to-GDP gap good news?

Mostly, but not unambiguously. A negative gap means credit is growing more slowly than its long-run trend — the opposite of a lending boom, and historically associated with low banking-crisis risk. But extreme negative readings, like Ireland’s −82pp in Q4 2025, partly reflect a trend still inflated by the previous boom, and a gap can normalise while the debt level and the cost of servicing it stay high. That is exactly why the BIS publishes the debt service ratio alongside it.

Data & methodology. All indicators originate from the Bank for International Settlements: credit-to-GDP gaps (actual ratio minus its one-sided HP-filter long-run trend, in percentage points), private non-financial sector debt service ratios, total credit to the private non-financial sector as % of GDP, and real residential property prices. Gap and DSR figures cited in the text and table are from the BIS Q4 2025 quarterly release; DSR percentiles are computed against each country’s own 1999–2025 quarterly history. Charts are served live from the WorldPulse knowledge graph and redraw as the BIS feed updates, so a chart’s latest point may briefly trail the release cited in the text. Known limitations, per BIS guidance: the HP-filter trend adapts slowly, so deeply negative gaps after a boom (Ireland) partly reflect an inflated trend; the COVID GDP collapse mechanically pushed 12 countries above +10pp in Q2 2020 without any lending boom; and the gap misses rate-driven stress, which is why the debt service ratio is shown alongside it. This article is analysis, not investment advice.

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