The economic downfall caused by the global pandemic is a serious issue and one that will definitely take ages to get resolved and potentially restored. A lot of countries have reported having a major ratio difference in their debts and GDPs. This refers to the ratio between a country’s total annual debts and its GDP. If the difference is small, it becomes easier for the country to pay off its debt in a short time, but in the case of higher ratio values, the country continues to struggle and pay off the debts until it seems unstoppable.
Many countries have found themselves drowning in the same situation because the measures taken by the government and other organizations to battle Covid-19 have put a lot of pressure on the debt scale. Because of the additional expenses, an increase of $20 trillion debt has been observed worldwide. According to the recent reports, it is estimated that 2020 will bring even more percentage of debt for the said countries hence putting immense pressure on the debt charts.
The following chart gives a brief report of 32 countries that have experienced a massive change in the ratio of Debt-to-GDP in the recent year. Taking the lead, Canada has experienced the maximum shift in their debts as there has been an 80% increase in their ratio, household being its biggest proportion. To help understand the debt, for each country, it has been broken down into 3 main categories, namely Households, Non-financial Corporates, and Government.
It is also important to note that despite the vaccine to fight coronavirus has begun its journey, the economic world is still lagging in the race. The routines, markets, and production might go back to how it was, but it will still take a considerable amount of time for the debts to lose their numbers and GDPs to gain their strength. The second wave of Covid-19 has increased the chances of Debt to GDP ratio, which could lead to an endangered GDP market. Let us all hope that the coronavirus as well as economic imbalance, find their way back.
Infographic by: Visualcapitalist.com