# What Is a Debt-to-GDP Ratio? Definition, Calculation & Significance

A nation’s debt-to-GDP ratio is a metric that expresses how leveraged a nation is by evaluating its public debt to its annual financial output.

Right like folks and agencies, worldwide locations veritably must borrow cash to finance projects. Nearly each and each nation on the earth carries some amount of debt, but some worldwide locations owe noteworthy more than others.

## What Is a Debt-to-GDP Ratio?

A debt-to-GDP ratio is a handy metric that analysts use to take into yarn a nation’s skill to pay off its cash owed. The ratio compares a nation’s debt to its annual financial output (atrocious domestic product). The better a nation’s debt-to-GDP ratio, the much less probably it’s in an effort to pay off its cash owed in a smartly timed system.

Most veritably, the D/GDP ratio is expressed as a share. If a nation’s D/GDP ratio is 100%, as an illustration, that might well well well per chance mean its annual financial output is roughly equal to its public debt.

Alternatively, the D/GDP ratio might well well well per chance be expressed as a numeral. When the metric this map, the ratio might well well well per chance be thought of because the selection of years it would purchase a nation to pay off all of its debt if it veteran all of its GDP to enact so (this might well by no map happen in actuality; it’s enticing yet every other technique to conceptualize the ratio). As an instance, if a nation had a D/GDP ratio of 1 (100%), it could truly per chance well per chance be in a position to pay off all of its debt in a single year if its complete financial output became veteran for that cause.

## How Is a Country’s Debt-to-GDP Ratio Calculated?

A nation’s debt-to-GDP ratio is calculated by dividing its complete public debt by its atrocious domestic product. The head result might well well well per chance be expressed both as a share (more traditional) or a numeral (much less traditional).

### Debt-to-GDP Ratio Formulation

Debt-to-GDP Ratio=Total Debt / GDP

## Debt-to-GDP Instance: Germany

In line with worldeconomics.com, Germany’s debt totaled around \$2,622 billion in 2020. Within the identical year, the nation’s GDP became about \$3,806 billion. To calculate Germany’s 2020 D/GDP ratio, simply divide the feeble by the latter:

Debt-to-GDP Ratio=Total Debt / GDP
Debt-to-GDP Ratio=\$2,622 billion / \$3,806 billion
Debt-to-GDP Ratio=0.689 or 68.9%

So, as of 2020, Germany’s D/GDP ratio became roughly 69%.

## Why Is a Country’s Debt-to-GDP Ratio Indispensable? What Can It Record You?

In traditional, the better a nation’s debt-to-GDP ratio, the more probably it’s that the nation might well well well even default on its debt one day in some unspecified time in the future. When a nation does default on its debt, financial turmoil tends to ensue domestically (and internationally, searching on the level to which the defaulting nation’s financial system is intertwined with different economies out of the country).

The better and more established a nation’s financial system—and the more it’s intertwined internationally with different gargantuan economies—the worse and in model the financial fallout might well well well per chance be if a gargantuan-scale default were to occur.

## Which Countries Enjoy the Most life like Debt-to-GDP Ratios?

• Japan: 237.00%
• Greece: 177.00%
• Lebanon: 151.00%
• Italy: 135.00%
• Singapore: 126.00%
• Cape Verde: 125.00%
• Portugal: 117.00%
• Angola: 111.00%
• Bhutan: 110.00%
• Mozambique: 109.00%
• United States: 107.00%

## Which Countries Enjoy the Lowest Debt-to-GDP Ratios?

• Brunei: 2.40%
• Cayman Islands: 5.70%
• Afghanistan: 7.10%
• Estonia: 8.40%
• Russia: 12.20%
• Kuwait: 14.80%
• Republic Of The Congo: 15.70%
• Palestine: 16.40%
• Libya: 16.50%
• Unique Zealand: 19.00%
• Nigeria: 17.50%

D/GDP records as of 2022 from worldpopulationview.com

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