Let me accept in the very beginning that I am no economic expert. All I am doing is point out to the data points based on past events.
These are the top 19 countries controlling world’s 80 % of
GDP. These are the countries which matter to our progress. Value of our money
is derived from the functioning of these economies.
|
Sr. |
Name |
GDP in Trillion |
Percent |
|
1 |
United States |
20.807269 |
24.92 |
|
2 |
China |
14.860775 |
17.80 |
|
3 |
Japan |
4.91058 |
5.88 |
|
4 |
Germany |
3.780553 |
4.53 |
|
5 |
United Kingdom |
2.638296 |
3.16 |
|
6 |
India |
2.592583 |
3.11 |
|
7 |
France |
2.551451 |
3.06 |
|
8 |
Italy |
1.848222 |
2.21 |
|
9 |
Canada |
1.600264 |
1.92 |
|
10 |
South Korea |
1.586786 |
1.90 |
|
11 |
Russia |
1.464078 |
1.75 |
|
12 |
Brazil |
1.363767 |
1.63 |
|
13 |
Australia |
1.334688 |
1.60 |
|
14 |
Spain |
1.247464 |
1.49 |
|
15 |
Indonesia |
1.088768 |
1.30 |
|
16 |
Mexico |
1.040372 |
1.25 |
|
17 |
Netherlands |
0.886339 |
1.06 |
|
18 |
Switzerland |
0.707868 |
0.85 |
|
19 |
Saudi Arabia |
0.680897 |
0.82 |
Out of the above following are the 9 countries to which 80%
of the world debt is owed.
|
Sr. No. |
Name |
Debt In
Trillion |
Percent |
|
1 |
United States |
21.465 |
32.42937 |
|
3 |
Japan |
11.788 |
17.80933676 |
|
2 |
China |
6.764 |
10.21906632 |
|
8 |
Italy |
2.744 |
4.145641336 |
|
7 |
France |
2.736 |
4.133554918 |
|
5 |
United Kingdom |
2.455 |
3.709019489 |
|
4 |
Germany |
2.438 |
3.683335851 |
|
6 |
India |
1.851 |
2.796494939 |
|
12 |
Brazil |
1.642 |
2.480737271 |
Out of the above following are the 5 countries having Debt
to GDP ratio more than 100%
GDP is total good and services you produce in the country in
a year. Debts are even though a long term obligation to be paid over the years is
always compared to GDP.
|
Sr. |
Name |
GDP
in Trillion |
Debt
in Trillion |
Debt
to GDP |
|
3 |
Japan |
4.91058 |
11.788 |
240.0531 |
|
8 |
Italy |
1.848222 |
2.744 |
148.467 |
|
12 |
Brazil |
1.363767 |
1.642 |
120.4018 |
|
7 |
France |
2.551451 |
2.736 |
107.2331 |
|
1 |
United States |
20.807269 |
21.465 |
103.1611 |
Even though Venezuela, Greece, Portugal also has more than
100% debt to GDP their economies are not large enough to have ramifications for
the entire world. Sure their financial crisis will have ripples on world
banking and economic environment, but world can come out of it.
For the above mentioned 5 countries even if they perform at
their usual efficiency they won’t be able to pay debt out of good manufactured
and services produced in one year. Such countries can borrow today and transfer
the obligation tomorrow. This is called debt trap where you keeping borrowing
money to pay current debt. In turn your debt kept on increasing. Such debt eventually
has to be paid.
The figures are pre-covid. You can expect drop in GDP
numbers across the world. This is alarming situation. The financial world runs
on trust. That debt will be served on time. And if some country default on
payment the trust is broken. There have been instances of default. Such countries
are punished severely by charging higher interest rates. But because those
economies were small and their debt were insignificant banks could bare
defaults.
The 5 countries listed above are major part of world
economy. Default on their part will devastating for world economy. Entire world
can go into recession.
Since last 6 months US 10 year benchmark Bond Yield has
already increased .8%. In simple words it means US 10 Year bonds are getting
cheaper. Bankers are selling them.
This is too early to call but if the trend continues, US might see a serious demand problem. World economy is dependent on US demand. If that fell, entire world can go into recession. Apart from USofA Japan, Italy, Brazil and France are also the economies we need to closely watch for.
