World Debt 101

OKOO WORLD DEBT KO KO Since the recession hit in 2008, there has been a lot of attention drawn to national debt and governmental budget deficits. Since then, many countries have been taking measures to curb spending and narrow those deficits. So what's the current state of world debt? DISTINGUISHING BETWEEN DEBTS It's important to note that there are different types of debt to consider: PUBLIC DEBTS PRIVATE DEBT INTERNAL DEBT EXTERNAL DEBTS VS. vs Money which is owed by a government as a result of issuing securities and bonds, or borrowing from financial institutions. All money owed by private citizens and companies. Money which is owed to lenders within the same country. Money which is owed to lenders abroad in foreign currencies. Internal and external debts can also be either private or public. PUBLIC DEBTS Which of the world's big players are deepest in the hole and which are breathing easy when it comes to public debt? Total Public Dept in 2011 (Billions) % of GDP (BILLION) 20000 400 SI5546 SI3 482 15000 300 229 8 100 200 105 103 5.000 $2635 S2006 825 SAB7 SZ28 JAPAN GREECE ITALY IRELAND UNITED STATES UNITED KINGDOM THE BIG According to analysts, Japan has so far been shielded from the potential economic shocks of Driven by a property bubble, Irish banks According to the IMF, lost revenues resulting from reduced economic Between 1997 Italy has held debt in excess of 100% of According to the Washington Post, and 2007, public sector wages in Greece rose by 50%, ahead of other Eurozone countries, a big contribution to Greece's GDP for more than tax cuts initiated by Presidents Bush and Obama two decades, but steady GDP growth and low budget deficits kept it afloat. Now that growth has slowed drastically, the debt is starting to take its toll. increased foreign borrowing from about $19 billion to $140 billion between 2004 output during the recession account its huge debt since most it is held in domestic currency, meaning that the money stays within the country. removed $6.3 trillion in anticipated for adding 25% of GDP to the UK's revenue from the US balance sheets. and 2008. debt between 2007 overspending problem. and 2011. (BILLION) 2.000 S1.88 341 | 258 1.00 229 1.00 S380 500 SI78 PIES RUSSIA AUSTRALIA CHINA SOUTH KOREA THE SMALL Russia's debts are relatively small at the And which have the smallest debts? While public debt in South Korea is low, household debt is equivalent to upward of moment, but, in light of slowing economic growth, the finance ministry has announced plans to triple the country's debt by 2014. These figures cover all public and private debts held abroad. 80% of GDP. EXTERNAL DEBTS Who owes what abroad? (BILLION) $9.836 10.000 390 8.00 $5.633 S5.624 6.000 I82 $2719 $2.684 108 4000 142 2000 S178 UNITED KINGDOM FRANCE GERMANY JAPAN ITALY UNITED STATES THE CREDITORS' MAP This map shows where the banks of some of the world's major players owe the biggest chunks of their debts: SE35.7 BILLION 6182.1 BILLION $1.13 TRILLION G512.7 BILL &BILLION UN g213.2 BILLION GERMANY USA JAPAN CHINA FRANCE $417 BILLION SPAIN ITALY S166.9 BILLION KEY: Primary flow of debt repayments (November 2011 figures) $338.9 BILLION KOX EXTERNAL DEBT PER CAPITA Looking at levels of external debt per capita, the size of the numbers becomes apparent: $3.696,467 LUXEMBOURG SA71,428 MONACO $226,503 NETHERLANDS $156.26 UNITED KINGDOM SIS2.063 SWITZERLAND S131220 NORWAY NET INTERNATIONAL INVESTMENT POSITION Debt statistics alone don't tell the whole story: debts owed to each nation must be accounted for. The difference between a country's external liabilities and its external assets is known as its Net International Investment Position. =$59.93 BILLIONE = S87L.66 BILLIONE Luxembourg, despite its apparently huge debts, is actually a net international creditor, with its assets projected as $59.93 billion dollars in excess of its liabilities at the end of 2011. The same is true for Switzerland, where assets exceed debts by some $871.66 billion. This is commonly seen in countries largely dependent on the finance sector, since they tend to hold large liabilities that drive up the nation's total external debt, but also hold equally large assets outside of their borders. These figures emphasise the importance of not taking debt statistics as a face-value measure of a country's economic position. But some of the world's leaders aren't doing quite so well: EUROPE UNITED KINGDOM UNITED STATES NEW ZEALANO Overall, the Eurozone, at the end of the third quarter of 2010, reported a net liability of The UK, at the end of the third quarter of 2011, reported net liabilities of The USA, at the end of 2011, reported preliminary net liabilities of New Zealand, at the end of the first quarter of 2012, reported a net liability of SL.475 TRILLION $394.37 BILLION $4.03 TRILLION SI04.69 BILLION 113% 16.2% 73.5% 26.7% of the year's GDP. of the zone's GDP. of the year's GDP. of the year's GDP. DEALING WITH DEFICITS In debt discussions, debt and deficit are often confused. A deficit is the annual difference between a government's revenues and its expenditures, while debt the accumulated total of those deficits to date. Thus deficit statistics are a good way of measuring how much extra debt a government is taking on. Deficit of 2011 O Percentage of GDP of 2011 8.6% SL.3 TRILLION UNITED STATES 1.3% SI77 6I BILLION UNITED KINGDOM .8% SI38.9 BILLION FRANCE 8.7% SIB0.11 BILLION SPAIN 3.6% $80.03 BILLION ITALY Only four nations in the EU reported a budgetary surplus in 2011: NORWAY HUNGARY SWEDEN ESTONIA Boasted the biggest surplus of Reported a surplus of Were in the black by Were under budget by $64.42 BILLION N $236.4 MILLION $562 BILLION SL.78 BILLION THERE A SOLUTION? What are the nations of the world doing to get national debts and deficits under control? JAPAN GREECE UNITED KINGDOM Japan is set to double consumption tax FROM Greece has passed an austerity package aimed at saving S172 BILION 5%-10% The British government says that by 2015 it will have abolished 204 publicly funded bodies, saving The passing of this package then opens the way for $40.1 billion in EU and IMF rescue funding. $A.I BILLION. by 2015. SPAIN PORTUGAL ITALY Frozen public sector pay. Raised sales tax from 18% to 21%. O A rise in average income tax from 9.8% to 11.8%. 20% tax on lottery wins over $3,200. O Additional taxes on luxury properties. Public sector pay frozen until 2014. • Aiming to cut $16.6 billion from government budgets. O Introduction of a Financial Transaction Tax. VAT to increase from 20% to 21%. WHAT IS THE FORECAST? So what does the future hold in terms of debt? The IMF predicts that, by 2016: A Projection percentage of GDP by 2016 A Percentage of GDP in 2011 248.8% 164% 183.3% 123.3% 420 142% 103% 95.8% 90% nRK JAPAN GREECE ITALY PORTUGAL USA UK FRANCE Many governments are clearly pulling out all of the stops in the name of curbing spending and getting their economies under control. Is austerity the right path back to prosperity, and are these measures enough to achieve it? Resource list: http://www.businessinsider.com/japan-is-never-going-to-default-2012-5 http://www.imf.org http://www.google.com/publicdata/ https://www.cia.gov/ibrary/publications/the-world-factbook/fields/2079.html http://www.weeklystandard.com/blogs/fy-2011-federal-deficit-13-trillion_595990.html http://online.wsj.com/article/SB1000 1424052748704590704576091322818539998.html http://www.ons.gov.uk/ons/rel/bop/balance-of-payments/3rd-quarter-2011/stb-bop-3rd-quarter-2011.html http://www.boa.gov/newsreleases/international/intinw/intinvnewsrelease.htm http://www.stats.govt.nz/browse_for_stats/economic_indicators/balance_of payments/BalanceOFPayments_HOTPMar12qtr/Definitions.aspx_ http://www.snb.ch/ext/stats/statmon/pdf/deen/R1_CH_Auslandverm_Uebersicht.pdf http://www.bcl.lu/en/statistics/series/o9_ip/09_01_Tabloxls http://www.washingtonpost.com/business/economy/running-in-the-red-how-the-us-on-the-road-to-surplus-detoured-to-massive-debt/2011/04/28/AFFU7:NF_ story.html cc BY ND $1 TRILLION BE74 BILLION