Japan Has The Highest Debt to GDP Ratio of Any Major Economy in the World
There is no question that the United States has a heavy debt load.
As of this second, the United States currently has a national debt load of over $11 trillion dollars.
This means that every man, woman and child in the United States currently owes around $37,000 as their share of the debt.
This is an eye-popping amount of money.
However, when you compare total debt size to the size of a country's GDP (Gross Domestic Product), the United States doesn't look nearly as bad.
As a matter of fact, there are some VERY large economies that are in MUCH worse shape when you look at the size of their debt load compared to their GDP.
Let's start with the United States so that we can give you some perspective.
The United States currently owes around $11.17 trillion dollars.
The Gross Domestic Product of the United States in 2008 was $14.2 trillion dollars.
So based on last year's GDP and the current amount of debt that the United States owes, their debt to GDP ratio is around 79%.
Sounds bad right?
Let's look at some other major economies throughout the world.
Let's start with Japan, which has the most crushing debt load (as a % of GDP) of any major economy in the world.
Japan, which is the second largest economy in the world behind the United States, currently owes around 170% of their annual GDP.
The country took on a mountain of debt during the "Lost Decade", and continues to borrow heavily in an effort to minimize the effects of the current global economic crisis.
Italy, which has the seventh largest economy in the world, currently owes around 104% of their GDP.
Germany, which has the third largest economy in the world, currently owes around 65% of their GDP.
Analysts have been warning that the United Kingdom, which currently has a relatively small debt load compared to countries such as Japan and the United States, could see their debt to GDP ratio swell over the coming years to as much as 80%.
This has led some to speculate that the United Kingdom may be forced to seek aid from the International Monetary Fund as their finances continue to deteriorate.
The point of this article?
It's easy for people to look at the total amount of money that the United States government owes and wag their fingers.
The reality though is that there are major G-7 economies that are in far worse shape when it comes to debt/GDP ratio.
Source: US National Debt Clock
Debt to GDP Ratios
Filed under: General Knowledge