Comparing Countries' Debt-to-GDP Ratios, Ratings

♠ Posted by Emmanuel in at 8/10/2011 12:01:00 AM
I just wanted to point out this nifty, sortable table from the WSJ comparing various countries' current S&P credit ratings, outlooks, and debt-to-GDP ratios from 2006 to 2016 (projected). I honestly believe that projections for US IOU growth are underestimated given its woeful growth prospects. Meanwhile, those for Japan are truly scary, with this ratio said to surpass 250% by 2016. (But Japan has huge reserves and chronic external surpluses as extenuating circumstances, right? )

Additionally, I wish to point out how developed countries' finances going forward are set to significantly deteriorate compared to those of developing countries through a combination of slower growth and more extensive future retirement and health care commitments. And I found it interesting that, among the countries listed, those with a long-term negative outlook were all developed countries and those with a long-term positive outlook were all developing countries. I guess it only further reinforces the fact that the major credit crises nowadays emanate from the global economic core (or close to it), not the periphery.

If LDC finances are generally sounder at this point in time, then why are they usually rated lower? Take Russia, for instance, with negligible levels of public debt only earning a BBB rating. Put it down to "political risk" and associated challenges to regime stability.

At any rate, things change, my dear. I'll take my chances on the Global South, thank you.