After Russia and Germany India is better than 7 economies among the top 10 leading economies.
The Debt-to-GDP ratio is a strong fundamental of any economy, serving as a key indicator of a country’s fiscal health and sustainability. This ratio compares a nation’s total debt to its Gross Domestic Product (GDP), providing valuable insights into the government’s ability to manage and service its debt obligations relative to the size of its economy.
In the realm of debt-to-GDP ratios among the top 10 economies, India demonstrates a commendable performance, as compared with leading economies such as Japan, Italy, USA, France, UK, Canada, and China.
India’s debt-to-GDP ratio was 72% (average) during the 2018 and 2019; however, it increased to 86% (average) during the corona pandemic years of 2020 and 2021. Then in the post pandemic years of 2022 and 2023, it again decelerated to 81 % (average), anticipated to rise marginally at 82% (average) in the forthcoming years of 2024 and 2025. This underscores India’s prudent fiscal management and positions India better in comparison to its global counterparts.
Japan stands out with the highest Debt-to-GDP ratio among the top 10 economies. In the pre-pandemic years of 2018 and 2019, the debt-to-GDP ratio was 234% (average), reflecting a substantial financial burden. The onset of the global pandemic in 2020 and 2021 witnessed a notable increase, at 256% (average), indicative of heightened economic challenges and increased borrowing to address the crisis. In 2022 and 2023, the Debt-to-GDP ratio in Japan continued its upward trajectory, reaching 257% (average). However, projections for 2024 and 2025 indicate a slight alleviation, with the Debt-to-GDP ratio anticipated to decrease to 251% (average).
Italy’s Debt-to-GDP Ratio is the second highest among the top 10 economies, in 2018 and 2019, it was 134% (average) but saw a significant surge, reaching 152% (average) during the pandemic years of 2020 and 2021. Subsequently, in the post-pandemic period of 2022 and 2023, it experienced a decline to 144% (average), indicating a recovery and fiscal management efforts. Anticipated further reduction in 2024 and 2025 to 143% (average) suggests a potential trend toward fiscal stabilization.
The USA holds the third-largest Debt-to-GDP Ratio among the top 10 economies. Averaging at 108% in 2020 and 2021, the ratio experienced a significant increase to 129% (average) during the pandemic years. Post-pandemic, in 2022 and 2023, there was a slight decline to 122% (average). However, projections indicate a potential increase to 129% on an average in 2024 and 2025, highlighting on-going fiscal challenges and the need for careful management in the coming years.
France’s Debt-to-GDP Ratio was 97% (average) in 2018 and 2019, but during the pandemic years of 2020 and 2021, it rose significantly to 114% (average). Post-pandemic, in 2022 and 2023, a marginal decline brought it to 110% (average). Projections suggest stabilization, with the ratio expected to remain constant at 110% on an average in 2024 and 2025.
The UK’s Debt-to-GDP Ratio averaged 85% in 2018 and 2019 before the corona pandemic years, but during the challenging years of 2020 and 2021, it experienced a significant increase to 105% (average). Subsequently, there was a slight decline in 2022 and 2023, with the Debt to GDP ratio at 103% (average). However, projections indicate a potential increase in 2024 and 2025, reaching 107% (average).
Canada’s Debt-to-GDP Ratio averaged 91% before the pandemic years of 2018 and 2019, but experienced a substantial increase to 117% on average during the pandemic years of 2020 and 2021. Thereafter, a decline occurred in 2022 and 2023 at 107% (average). Projections for 2024 and 2025 suggest a further decline to 102% (average), reflecting potential on-going efforts to manage and stabilize the country’s fiscal position.
China’s Debt-to-GDP Ratio has been on an ascending trajectory. In 2018 and 2019 the ratio was 58% (average), but during the pandemic years of 2020 and 2021, it witnessed a significant jump to 71% (average). Continuing this trend, the ratio further rose to 79% (average) in 2022 and 2023, signalling sustained fiscal challenges. Projections for 2024 and 2025 indicate a continued increase, reaching at 89% (average), creating significant challenges to manage the fiscal scenario in the coming years.
Germany’s Debt-to-GDP Ratio averaged 61% in 2018 and 2019, but underwent an increase to 69% on average during the years 2020 and 2021. Following this, a slight decline occurred in 2022 and 2023, with the ratio at 66% (average). Anticipated further decline in 2024 and 2025 to 63% (average) indicates on-going efforts to manage and mitigate the country’s debt burden, emphasizing a strategic approach to economic stability in the country.
Russia maintains the lowest Debt-to-GDP Ratio among the top 10 economies. In 2018 and 2019 it was 14% (average), the ratio experienced a modest increase to 18% (average) during the pandemic years of 2020 and 2021. Subsequently, there was a further rise to 20% (average) in 2022 and 2023. Projections for 2024 and 2025 indicate a slight increase to 22% (average), this will have challenges in the times of conflict with Ukraine.
India’s nearly constant debt-to-GDP ratio from 2018 to 2022, followed by an expected decrease from 2023 to 2025, suggests a period of stable fiscal management followed by a positive shift in the country’s financial outlook. It reflects efforts to balance economic growth with prudent debt management, contributing to overall economic stability and investors’ confidence. The efforts of the government are appreciable as there is a great balance between management of Debt to GDP Ratio along with calibrated measures to tackle high inflationary pressures and maintaining high growth trajectory of more than 7% at the same time. (Times of Oman)