The Economist’s public debt clock, which keeps a running tally on the debts being racked up by governments around the globe, is “not perfectly accurate,” the magazine acknowledges, but it does give a snapshot of the extraordinary amount of money now owed. It uses public data and forecasts prepared by the Economist Intelligence Unit.
Huge amounts of money are being borrowed by governments in the wake of the recession, partly to pay for bailouts, stimulus programs, and help for the unemployed. But the key reason for the deep hole being dug, the International Monetary Fund says, is that government tax revenue has fallen sharply.
As The Economist notes: “Not since the Second World War have so many governments borrowed so much so quickly or, collectively, been so heavily in hock.”
Debt crises in various countries play across the news daily. As the focus of attention, Greek’s recent debt problems have given way to Ireland’s, where the European Union and the International Monetary Fund are poised to make some form of bailout.
The Economist clock also makes a projection going forward, and that’s even more depressing than today’s figures. By this time next year, another $3-trillion (U.S.) will have been added to government debt around the world, it projects. Over the longer term, the IMF says the ratio of gross government debt to GDP will reach a staggering 110 per cent among developed countries by 2015, compared to about 75 per cent in 2007.
JAPAN
Public debt: $10.71-trillion
Per person: $84,435
The most heavily indebted country in the world, Japan’s fiscal situation has been exacerbated by a domestic economy that has been stalled for years. The government has spent heavily on stimulus, but growth has been hindered by the high social costs of dealing with an aging – and shrinking – population. The government’s gross debt is now almost 200 per cent of GDP, compared to just 60 per cent 20 years ago. One small bright light is that most of the country’s debt is held by Japanese individuals, not foreign nations or institutions.
UNITED STATES
Public debt: $9.19-trillion
Per person: $29,730
The amount of debt racked up by the U.S. government is astonishing, but at least it is backed by the world’s largest economy. The enormous stimulus packages that Washington has put in place caused the total debt to balloon to unprecedented levels over the past couple of years. A bigger worry for the United States is that so much of its government debt – about one-quarter – is held outside the country, with more than $1-trillion held by China.
IRELAND
Public debt: $146-billion
Per person: $35,165
Ireland is the latest poster child for the European financial crisis, as its government debt balloons amidst a plunging housing market and a shrinking economy. While the country is resisting a bailout, it admits it can’t borrow any more money on world markets because the interest rates it has to pay are so high. If something isn’t done, the contagion could spread to those who have lent the country money, particularly the British banks that hold large amounts of Irish government debt.
CANADA
Public debt: $1.26-trillion
Per person: $37,121
The Economist’s clock puts Canada’s total debt at a considerably higher level than the $1-trillion cited by most domestic economists as our combined federal and provincial debt. Still, the numbers have been growing in the past couple of years, as Ottawa and many provinces shifted out of the black and started running deficits in an attempt to kick-start the economy. The federal Conservatives say they will balance the budget by 2015-2016, and the total debt numbers should start to fall again. The Canadian Taxpayers Federation has its own debt clock that tallies just federal government debt, and it is now quickly advancing towards $548-billion.
AUSTRALIA
Public debt: $255-billion
Per person: $11,509
Compared with Canada, which has roughly the same size economy, Australia’s fiscal situation is much rosier, with total public debt less than a quarter of ours. While the Australian federal government expects a deficit of about $40-billion this year, it is projected to fall to $10-billion next year and be back to surplus within two years. It helps that the Australian economy never really fell into recession, and the country is poised to take advantage of growth in China and other Asian countries.
