Excess global debt is a major concern for J.P. Morgan‘s international chairman.

Speaking at the World Economic Forum in Davos, Jacob Frenkel said: “My main concern is problems arise, always, when you are overly optimistic (and) when you take too much debt.”

“This was the main lessons from all the previous crises,” he added.

The International Monetary Fund (IMF) upwardly revised its global growth forecasts for 2018 and 2019 on Monday, saying the revision is partly down to the recently approved overhaul of the U.S. tax system under President Donald Trump.

Global growth forecasts for 2018 and 2019 have both been revised upward by 0.2 percentage points to 3.9 percent.

Frenkel said that an apparent air of optimism among global business and political leaders attending Davos this year was “justified” because the economic performance of each and every region of the world was better than the previous year.

Nonetheless, the somewhat rosy economic outlook was also reason to be concerned.

J.P. Morgan’s Frenkel argued the main challenge was to ensure improving economies worldwide “grounded” their growth by building on real investment activities and not just by increasing debt.

“Because increasing debt is based on the assumption that you will be able to pay it, that you may be able to refinance it, that interest rates will stay low and all of these assumptions need to be tested.”

Global debt levels skyrocketed to a record high of $233 trillion in the third quarter of 2017, according to the Institute of International Finance. The Washington D.C.-based financial industry body said at the start of 2018 that total debt had risen by $16 trillion in the third quarter when compared to year-end of 2016.

When asked what he perceived to be the most pressing concern for the global economy, Frenkel replied: “A rapid rise in debt — in corporate, household, governments and the like. But I don’t want to be misinterpreted, I am optimistic about the state of the world economy.”

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