January 29, 2010 / 9:35 AM / 7 years ago

Factbox: The debt dragon stirs in G20 countries

4 Min Read

(Reuters) - Governments around the world have been forced to dig deep

to shield their economies from the global financial crisis, but now face a

potentially crippling debt burden which could drag on growth for years to come.

The World Economic Forum put the prospect of deteriorating government

finances pushing economies into fully-fledged debt crises at the top of its list

of global economic risks in 2010.

The International Monetary Fund estimates government debt in advanced G20

economies will outstrip the size of economic output this year and could push up

long-term interest rates by 2 percentage points, although developing nations are

in better shape.

Deutsche Bank economists say the risk of sovereign default has increased as

the debt burden has risen, either directly or indirectly, with countries facing

the temptation to let higher inflation erode the value of debt.

Still, the IMF calculates letting inflation rise to 6 percent in advanced

economies would erode less than a quarter of the extra debt built up as a result

of the financial crisis.

Countries with large public debt are also often vulnerable to the goodwill

of large international investors to keep investing in their bond issues.

Thomson Reuters data shows that while the largest reported institutional

investors in debt from the United States, France and Britain are local

investment funds, the biggest investors for countries including Australia, Japan

and Indonesia are based offshore.

Below is a table on rising public debt in selected G20 economies:

GROSS GOVT DEBT NET INTEREST SOVEREIGN DEBT INSTITUTIONAL DEBT

AS SHARE OF GDP REPAYMENT/GDP ISSUES 2007-ON HOLDINGS JAN 2010

2007 2010* 2014* 2007 2014* (US$ Billion) (US$ Billion)

Argentina 67.9 58.1 46.4 4.5 2.6 0.5 4

Australia 9.8 22.7 27.8 -0.4 0.9 103.8 7

Brazil 66.8 65.9 58.8 6.3 4.3 12.5 9

Canada 64.2 79.3 68.9 0.6 0.2 275.4 46

China 20.2 22.2 20.0 0.4 0.6 44.2 36

France 63.8 85.4 96.3 2.3 3.2 236 162

Germany 63.4 84.5 89.3 2.4 2.1 578.8 93

India 80.5 85.9 78.6 5.5 5.6 1.2 n/a

Indonesia 35.1 31.2 27.1 2.0 1.8 11.6 9

Italy 103.5 120.1 128.5 4.8 6.2 58.5 122

Japan 187.7 227.0 245.6 0.5 2.6 270.1 41

Korea 29.6 39.4 35.4 1.4 1.5 4.9 2

Mexico 38.2 47.9 44.3 2.7 2.8 23.5 19

Russia 7.4 7.7 7.2 0.6 0.6 n/a 66

Saudi Arabia 18.5 12.5 9.3 1.5 0.6 n/a n/a

South Africa 28.5 33.5 34.8 1.1 1.4 2.5 n/a

Turkey 39.4 49.6 52.8 5.9 5.4 n/a 7

United Kingdom 44.1 81.7 98.3 1.6 3.1 198.3 81

United States 61.9 93.6 108.2 2.2 4.5 403.7 517

* Forecasts (IMF)

Source: Thomson Reuters Deal Intelligence, eMAXX, Datastream, IMF

(ww.imf.org)

Compiled by Carl Bagh, Bangalore Editorial Reference Unit;

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