Area Development
In its Farewell to cheap capital? report, McKinsey expects low interest rates - which many individuals and businesses have come to consider the norm - to increase over the next few years. With global credit shaken, these low rates will prove unsustainable.

Around the world, developing nations are rapidly building infrastructure, schools, hospitals, and other large-scale public works projects. This is especially the case in China, where companies are expanding manufacturing facilities and workers are upgrading their homes. The urge to invest will likely outweigh savings, increasing interest rates in China and in other developing nations. This trend will also slow investment and global growth to an extent.

McKinsey's other key findings include:
• The decline in capital demand among developed economies is an overlooked catalyst of the approximately 30-year interest rate drop that grew the credit bubble.
• By 2020, global investment demand could reach highs unseen since the post-World War II era of rebuilding in Europe and Japan.
• The investment boom will place upward pressure on real interest rates unless the global savings rate increases substantially.