The 10 Countries Deepest in Debt

February 14, 2012

10. United Kingdom英国
> Debt as a pct. of GDP: 80.9%
> General government debt: $1.99 trillion
> GDP per capita (PPP): $35,860
> Nominal GDP: $2.46 trillion
> Unemployment rate: 8.4%
> Credit rating: Aaa

Although the UK has one of the largest debt-to-GDP ratios among developed nations, it has managed to keep its economy relatively stable. The UK is not part of the eurozone and has its own independent central bank. The UK’s independence has helped protect it from being engulfed in the European debt crisis. Government bond yields have remained low. The country also has retained its Aaa credit rating, reflecting its secure financial standing.

9. Germany德国
> Debt as a pct. of GDP: 81.8%
> General government debt: $2.79 trillion
> GDP per capita (PPP): $37,591
> Nominal GDP: $3.56 trillion
> Unemployment rate: 5.5%
> Credit rating: Aaa

As the largest economy and financial stronghold of the EU, Germany has the most interest in maintaining debt stability for itself and the entire eurozone. In 2010, when Greece was on the verge of defaulting on its debt, the IMF and EU were forced to implement a 45 billion euro bailout package. A good portion of the bill was footed by Germany. The country has a perfect credit rating and an unemployment rate of just 5.5%, one of the lowest in Europe. Despite its relatively strong economy, Germany will have one of the largest debt-to-GDP ratios among developed nations of 81.8%, according to Moody’s projections.

8. France法国
> Debt as a pct. of GDP: 85.4%
> General government debt: $2.26 trillion
> GDP per capita (PPP): $33,820
> Nominal GDP: $2.76 trillion
> Unemployment rate: 9.9%
> Credit rating: Aaa

France is the third-biggest economy in the EU, with a GDP of $2.76 trillion, just shy of the UK’s $2.46 trillion. In January, after being long-considered one of the more economically stable countries, Standard & Poor’s downgraded French sovereign debt from a perfect AAA to AA+. This came at the same time eight other euro nations, including Spain, Portugal and Italy, were also downgraded. S&P’s action represented a serious blow to the government, which had been claiming its economy as stable as the UK’s. Moody’s still rates the country at Aaa, the highest rating, but changed the country’s outlook to negative on Monday.

7. United States美国
> Debt as a pct. of GDP: 85.5%
> General government debt: $12.8 trillion
> GDP per capita (PPP): $47,184
> Nominal GDP: $15.13 trillion
> Unemployment rate: 8.3%
> Credit rating: Aaa

U.S. government debt in 2001 was estimated at 45.6% of total GDP. By 2011, after a decade of increased government spending, U.S. debt was 85.5% of GDP. In 2001, U.S. government expenditure as a percent of GDP was 33.1%. By 2010, is was 39.1%. In 2005, U.S. debt was $6.4 trillion. By 2011, U.S. debt has doubled to $12.8 trillion, according to Moody’s estimates. While Moody’s still rates the U.S. at a perfect Aaa, last August Standard & Poor’s downgraded the country from AAA to AA+.

6. Belgium比利时
> Debt as a pct. of GDP: 97.2%
> General government debt: $479 billion
> GDP per capita (PPP): $37,448
> Nominal GDP: $514 billion
> Unemployment rate: 7.2%
> Credit rating: Aa1

Belgium’s public debt-to-GDP ratio peaked in 1993 at about 135%, but was subsequently reduced to about 84% by 2007. In just four years, the ratio has risen to nearly 95%. In December 2011, Moody’s downgraded Belgium’s local and foreign currency government bonds from Aa1 to Aa3. In its explanation of the downgrade, the rating agency cited “the growing risk to economic growth created by the need for tax hikes or spending cuts.” In January of this year, the country was forced to make about $1.3 billion in spending cuts, according to The Financial Times, to avoid failing “to meet new European Union fiscal rules designed to prevent a repeat of the eurozone debt crisis.”

5. Portugal葡萄牙
> Debt as a pct. of GDP: 101.6%
> General government debt: $257 billion
> GDP per capita (PPP): $25,575
> Nominal GDP: $239 billion
> Unemployment rate: 13.6%
> Credit rating: Ba3

Portugal suffered greatly from the global recession — more than many other countries — partly because of its low GDP per capita. In 2011, the country received a $104 billion bailout from the EU and the IMF due to its large budget deficit and growing public debt. The Portuguese government now “plans to trim the budget deficit from 9.8 percent of gross domestic product in 2010 to 4.5 percent in 2012 and to the EU ceiling of 3 percent in 2013,” according Business Week. The country’s debt was downgraded to junk status by Moody’s in July 2011 and downgraded again to Ba3 on Monday.

4. Ireland爱尔兰
> Debt as a pct. of GDP: 108.1%
> General government debt: $225 billion
> GDP per capita (PPP): $39,727
> Nominal GDP: $217 billion
> Unemployment rate: 14.5%
> Credit rating: Ba1

Ireland was once the healthiest economy in the EU. In the early 2000s, it had the lowest unemployment rate of any developed industrial country. During that time, nominal GDP was growing at an average rate of roughly 10% each year. However, when the global economic recession hit, Ireland’s economy began contracting rapidly. In 2006, the Irish government had a budget surplus of 2.9% of GDP. In 2010, it accrued a staggering deficit of 32.4% of GDP. Since 2001, Ireland’s debt has increased more than 500%. Moody’s estimates that the country’s general government debt was $224 billion, well more than its GDP of $216 billion. Moody’s rates Ireland’s sovereign debt at Ba1, or junk status.

3. Italy意大利
> Debt as a pct. of GDP: 120.5%
> General government debt: $2.54 trillion
> GDP per capita (PPP): $31,555
> Nominal GDP: $2.2 trillion
> Unemployment rate: 8.9%
> Credit rating: A3

Italy’s large public debt is made worse by the country’s poor economic growth. In 2010, GDP grew at a sluggish 1.3%. This was preceded by two years of falling GDP. In December 2011, the Italian government passed an austerity package in order to lower borrowing costs. The Financial Times reports that according to consumer association Federconsumatori, the government’s nearly $40 billion package of tax increases and spending cuts will cost the average household about $1,500 each year for the next three years. On Monday, Moody’s downgraded Italy’s credit rating to A3, from A2.

2. Greece希腊
> Debt as a pct. of GDP: 168.2%
> General government debt: $489 billion
> GDP per capita (PPP): $28,154
> Nominal GDP: $303 billion
> Unemployment rate: 19.2%
> Credit rating: Ca

Greece became the poster child of the European financial crisis in 2009 and 2010. After it was bailed out by the rest of the EU and the IMF, it appeared that matters could not get any worse. Instead, Greece’s economy has continued to unravel, prompting new austerity measures and talks of an even more serious default crisis. In 2010, Greece’s debt as a percent of GDP was 143%. Last year, Moody’s estimates Greece’s debt increased to 163% of GDP. Greece would need a second bailout worth 130 billion euro — the equivalent of roughly $172 billion — in order to prevent the country from defaulting on its debt in March.

1. Japan日本
> Debt as a pct. of GDP: 233.1%
> General government debt: $13.7 trillion
> GDP per capita (PPP): $33,994
> Nominal GDP: $5.88 trillion
> Unemployment rate: 4.6%
> Credit rating: Aa3

Japan’s debt-to-GDP ratio of 233.1% is the highest among the world’s developed nations by a large margin. Despite the country’s massive debt, it has managed to avoid the type of economic distress affecting nations such as Greece and Portugal. This is largely due to Japan’s healthy unemployment rate and population of domestic bondholders, who consistently fund Japanese government borrowing. Japanese vice minister Fumihiko Igarashi said in a speech in November 2011 that “95% of Japanese government bonds have been financed domestically so far, with only 5% held by foreigners.” Prime Minister Yoshihiko Noda has proposed the doubling of Japan’s 5% national sales tax by 2015 to help bring down the nation’s debt.