If you add up all the money that national governments have borrowed, it tallies to a hefty $63 trillion.
In an ideal situation, governments are just borrowing this money to cover short-term budget deficits or to finance mission critical projects. However, around the globe, countries have taken to the idea of running constant deficits as the normal course of business, and too much accumulation of debt is not healthy for countries or the global economy as a whole.
The U.S. is a prime example of “debt creep” – the country hasn’t posted an annual budget surplus since 2001, when the federal debt was only $6.9 trillion (54% of GDP). Fast forward to today, and the debt has ballooned to roughly $20 trillion (107% of GDP), which is equal to 31.8% of the world’s sovereign debt nominally.
The World Debt Leaderboard
In today’s infographic, we look at two major measures: (1) Share of global debt as a percentage, and (2) Debt-to-GDP.
Let’s look at the top five “leaders” in each category, starting with share of global debt on a nominal basis:
|Rank||Countries||Debt ($B)||% of Global Debt||Debt-to-GDP|
Together, just these five countries together hold 66% of the world’s debt in nominal terms – good for a total of $41.6 trillion.
Next, here’s the top five for Debt-to-GDP:
|Rank||Country||Debt ($B)||% of Global Debt||Debt-to-GDP|
While only Italy and Japan here are considered major economies on a global scale, the high debt levels of countries like Greece or Portugal are also important to monitor.
In the IMF’s baseline scenario, Greece’s government debt will reach 275% of its GDP by 2060, when its financing needs will represent 62% of GDP.
A recent IMF report, obtained by Bloomberg
Greece, for example, is continuing along a particularly unsustainable path – and external creditors are getting stingier. Most recently, both the IMF and Greece’s euro-area creditors have demanded for the country to implement a law that automatically introduces austerity measures if a budget surplus of 3.5% of GDP isn’t hit.
While Greece has dismissed such demands as “unacceptable”, the country – along with many others around the globe – will have to accept that constant debt accumulation has eventual consequences.
Written by Jeff Desjardins