World economies and their currencies can find themselves teetering on the brink when swamped by massive debt. Governments, often borrowing to fund infrastructural projects and invest in their nations’ futures, have seen a sharp rise in indebtedness in recent years, largely attributed to plunging interest rates.
Insider Monkey, leaning on the International Monetary Fund data, spotlighted the top five nations submerged in debt in 2022. Countries are gauged based on their total debts as a percentage of Gross Domestic Product (GDP).
5. The United States: A Debt Ratio of 121.4%
The United States, with debt amassing to 121.4% of its GDP, occupies the fifth position in global debt rankings. Known for its substantial external debt, the U.S. is under scrutiny for its financial sustainability.
4. Italy: Struggling Despite a Surplus
Italy, even while enjoying a current account surplus, struggles with debt amounting to 144.4% of its GDP. With the nation’s taxes failing to cover total expenditures and a significant chunk of its debt owed to foreign entities, Italy’s financial stability is in the balance.
3. Venezuela: Inflation and Debt Woes
Venezuela’s financial woes are highlighted by a staggering 157.8% debt-to-GDP ratio in 2022. The country experienced a horrifying inflation surge reaching 130,000% in 2018, further complicating its economic predicament.
2. Greece: The Infamous Debt Crisis Continues
Greece, having made headlines with its uncontrolled debt crisis in 2009 amidst the global financial recession, has a debt that now amounts to 177.4% of its GDP. Despite showing signs of recovery in recent years, the country’s economic health remains fragile.
1. Japan: The World’s Most Indebted Nation
With a whopping 261.3% debt-to-GDP ratio in 2022, Japan is the most indebted country globally. Its rising elderly population has thrust an increasing burden of healthcare, pension, and social security expenditures onto its economic shoulders.
G7 Members Amidst Rising Debts
Interestingly, three nations from the Group of Seven (G7) – the United States, Italy, and Japan – are embroiled in the unnerving statistics of the top 5 indebted countries, drawing attention to the potentially precarious economic scenarios in some of the world’s most advanced economies.
The staggering debt levels in these nations indicate a possible looming global economic concern. While borrowing often facilitates investments for the future, excessive debt leads to economic instability, influencing both domestic and international markets. This revelation of towering debts among a few of the world’s economic giants places a question mark on future economic stability and progression.