82115595-10 Countries With the Most Debt in the World 21-2-2012.pdf

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10 Countries With The Most Debt

On The Planet

Many of the countries with the highest debt levels relative to their gross domestic products have been hit hardest by the global recession. Greece, Ireland and Portugal all have unemploymentrates above 14%. Wealth in these countries is extremely low. In the case of Portugal, GDP per capita in 2010 was just $25,575, lower than every country in the developed world exceptSlovakia. The combination of extremely high debt, high liabilities and sinking national

productivity has resulted in credit downgrades to below investment grade, or junk, bond status.Moodys rates Ireland Ba2, Greece Ca, and just downgraded Portugal to Ba3.

10. United Kingdom

y Debt as a pct. of GDP: 80.9%y General government debt: $1.99 trillion

y GDP per capita (PPP): $35,860y Nominal GDP: $2.46 trillion

y Unemployment rate: 8.4%y Credit rating: A aa

A lthough the UK has one of the largest debt-to-GDP ratios among developed nations, it hasmanaged to keep its economy relatively stable. The UK is not part of the eurozone and has its

own independent central bank. The UKs independence has helped protect it from being engulfedin the European debt crisis. Government bond yields have remained low. The country also has

retained its A aa credit rating, reflecting its secure financial standing.


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9 . Germany




A s the largest economy and financial stronghold of the EU, Germany has the most interest inmaintaining debt stability for itself and the entire eurozone. In 2010, when Greece was on theverge 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 hasa 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 Moodys projections.


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8 . France




France is the third-biggest economy in the EU, with a GDP of $2.76 trillion, just shy of the UKs$2.46 trillion. In January, after being long-considered one of the more economically stable

countries, Standard & Poors 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, werealso downgraded. S&Ps action represented a serious blow to the government, which had beenclaiming its economy as stable as the UKs. Moodys still rates the country at A aa, the highest

rating, but changed the countrys outlook to negative on Monday.


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7 . United States

Debt as a pct. of GDP: 85.5%General government debt: $12.8 trillion

GDP per capita (PPP): $47,184Nominal GDP: $15.13 trillion

Unemployment rate: 8.3%Credit rating: A aa

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 Moodys estimates.While Moodys still rates the U.S. at a perfect A aa, last A ugust Standard & Poors downgraded

the country from AAA to AA+ .


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6 . Belgium

y Debt as a pct. of GDP: 97.2%y General government debt: $479 billion

y GDP per capita (PPP): $37,448y Nominal GDP: $514 billiony Unemployment rate: 7.2%

y Credit rating: A a1

Belgiums public debt-to-GDP ratio peaked in 1993 at about 135%, but was subsequentlyreduced to about 84% by 2007. In just four years, the ratio has risen to nearly 95%. In December 2011, Moodys downgraded Belgiums local and foreign currency government bonds from A a1

to A a3. In its explanation of the downgrade, the rating agency cited the growing risk toeconomic 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.


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5 . Portugal


y GDP per capita (PPP): $25,575y Nominal GDP: $239 billion

y Unemployment rate: 13.6%y 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 Portuguesegovernment 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 Bu sinessWeek . The countrys debt was downgraded to junk status by Moodys in July 2011 and

downgraded again to Ba3 on Monday.


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4 . Ireland


y GDP per capita (PPP): $39,727y Nominal GDP: $217 billion

y Unemployment rate: 14.5%y Credit rating: Ba1

Ireland was once the healthiest economy in the EU. In the early 2000s, it had the lowestunemployment rate of any developed industrial country. During that time, nominal GDP wasgrowing at an average rate of roughly 10% each year. However, when the global economic

recession hit, Irelands 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, Irelands debt has increased more than 500%. Moodys estimates that the countrysgeneral government debt was $224 billion, well more than its GDP of $216 billion.

Moodys rates Irelands sovereign debt at Ba1, or junk status.


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3 . Italy

Debt as a pct. of GDP: 120.5%General government debt: $2.54 trillion

GDP per capita (PPP): $31,555Nominal GDP: $2.2 trillionUnemployment rate: 8.9%

Credit rating: A 3

Italys large public debt is made worse by the countrys poor economic growth. In 2010, GDP

grew at a sluggish 1.3%. This was preceded by two years of falling GDP. In December 2011 , theItalian government passed an austerity package in order to lower borrowing costs. The Financial Times reports that according to consumer association Federconsumatori, the governments 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, Moodys downgraded

Italys credit rating to A 3, from A 2.


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2 . Greece

y Debt as a pct. of GDP: 1 68 .2% y General government debt: $ 489 billion

y GDP per capita (PPP): $ 28, 154 y Nominal GDP: $303 billion

y Unemployment rate: 19.2%y Credit rating: Ca

Greece became the poster child of the European financial crisis in 2009 and 2010. A fter it was bailed out by the rest of the EU and the IMF, it appeared that matters could not get any worse.

Instead, Greeces economy has continued to unravel, prompting new austerity measures and talksof an even more serious default crisis. In 2010, Greeces debt as a percent of GDP was 143%.Last year, Moodys estimates Greeces debt increased to 163% of GDP. Greece would need asecond bailout worth 130 billion euro the equivalent of roughly $172 billion in order to

prevent the country from defaulting on its debt in March.


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1. Japan



y Unemployment rate: 4.6%y Credit rating: A a3

Japans debt-to-GDP ratio of 233.1% is the highest among the worlds developed nations by a

large margin. Despite the countrys massive debt, it has managed to avoid the type of economicdistress affecting nations such as Greece and Portugal. This is largely due to Japans healthyunemployment 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 only5% held by foreigners. Prime Minister Yoshihiko Noda has proposed the doubling of Japans

5% national sales tax by 2015 to help bring down the nations debt.

247w allst.com/

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82115595-10 Countries With the Most Debt in the World 21-2-2012.pdf