Debt-to-GDP Rises Around the World
In 2020, the world’s economy was created by borrowing money as the debt chart above details. The VisualCapitalist.Com has done an excellent job of communicating a world of growing debt, by nation, and by the type of debt.
With vaccines slowly rolling out, a world in financial crisis will take far longer to resolve than it did to create a COVID-19 vaccine. The pandemic damage continues in waves as governments attempt to borrow their way out of the crisis.
The economic situation is unlikely to improve anytime soon. Beyond 2021 we may still find the world picking up the pandemic pieces. The new ânormalâ will be unlike anything we called normal before the Covid-19 crisis.
Jobs have been lost, not just for 2020, but forever as small businesses were forced out of business. Large companies and entire industries are still laying off workers and the timeline for ânormalâ is still unknown in big cities, the airlines, cruise industries, travel, and lodging. Even Mickey Mouse has no idea when he’ll be called back to work or when lockdowns will will be lifted at Disneyland.
Massive Debt Load Remains
Even if the Covid 19 comes under control by the end of 2021, the debt load will remain for governments, businesses, and individuals most affected by job loss. A huge risk remains if interest on debt rises even 1% from todayâs historic lows.
Falling revenues combined with costly pandemic relief measures have increased global debt by $20 trillion since the third quarter of 2019.
By the end of 2020, economists expect global debt to reach $277 trillion, or 365% of world GDP.
The chart above uses data from the Institute of International Finance (IIF) to provide an overview of where debt, relative to GDP, has increased the most.
It’s an alarming analysis that the nations we perceive as leading the world’s economy are in need of the most borrowing to survive. See also Debt matters, it really matters.
Sooner or later the debt burden becomes its own crisis.