If you’re not an economist and don’t have much of a grasp on economics, then the world can be a confusing place. After all, the United States is considered to be the richest and most powerful nation on earth, yet it has a colossal debt. It’s not the only one either, and it’s actually considered normal for first world nations to be in debt, with this debt being owed to other first world nations, who in turn also owe a lot of money. It’s a bewildering cycle and one that might surprise you, particularly when you learn just who owes what.
Below is a list of the ten countries who have the highest external debts, listed in descending order from lowest debt to highest.
10 – Spain
It has been calculated that Spain owe 1,661 Euros in interest every second. They may not be as high on this list as many of their neighbors, but their debt is big in comparison to their GDP, which is when things really start to become problematic. A large chunk of their debt is owed to Germany, with the UK and France also very high on their list of creditors.
9 – Netherland
The Netherlands have a hefty debt, but one that puts them at a very marginal risk of defaulting. They owe money to most of Europe’s biggest economies and are also owed money in return. Their debt adds up to more $220,000 per person.
8 – Italy
Italy have not been without their problems in recent years, but they remain as one of the richest countries in Europe and they also have the third highest stockpile of gold in the world. This has not stopped them from accumulating a huge debt of $2 trillion though, which accounts for 124% of their GDP, with a large part of it owed to France.
Japan has one of the highest public debts in the world, and it also has a significant external debt, most of which is owed to the United States. It also owes to major European economies, including the UK, France and Germany, and to China. Its debt is just 60% of its GDP and comes in at just $24,000 per capita, which is actually a lot lower than it sounds.
Although China has a large debt, it has one of the smallest when compared to its GDP, which means that it is earning a lot more than it is borrowing. This is why China is growing at such a phenomenal rate, and why it has shifted from obscurity to world superpower status in less than two decades. There are economists who predict that China will soon collapse under the weight of its own success, and there have been a few worrying blips, particularly in 2015. However, in the same year it was reported that China’s debt was just 37.5% of its GDP.
A small country in Europe, Luxembourg is known for its banking operations, and is not particularly well known for its GDP. This is why their debt is more than 3,000% of their GDP, but even then they are not at a huge risk of defaulting.
The powerhouse of Europe, Germany has backed several struggling Eurozone countries, trying to limit its losses at the same time. It has loaned a lot of money to countries like Greece, and also to many richer European countries, who in-turn owe Germany a lot of money. Germany also owes the United States and Japan, and its total debt was 145% of its GDP in 2015.
France is one of the biggest economies in Europe, but it also has one of the biggest debts. However, many of the billions of dollars that it owes to countries like the UK and Germany are owed back to it. This swapping of debt is common in Europe. The biggest problem that France faces is that it is greatly exposed to the inadequacies of others, as its banks have loaned vast sums of money to many suffering Eurozone countries, including Greece and Spain.
2. United Kingdom
The United Kingdom owes a lot of money, accounting for more than 400% of its GDP, but it is also owed a lot in return and its status on the global stage, and the fact that most of its debt is owed to its closest ally, the US, means that it has a very low risk of defaulting. The UK also owes to Japan, Germany and France, among others, and it even owes more than $100 billion to Ireland, who are at a serious risk of default and could really use that money. That is, of course, if they didn’t owe the UK even more than was owed to them.
1. United States
The United States has a staggering debt, and when you compare this to their GDP things still look pretty poor for the world’s biggest economy. Still, it has been that way for a long time and it is a finely balanced debt, and one that shouldn’t cripple them anytime soon. They owe vast sums of money to China, Japan and the United Kingdom, but a smaller proportion is also owed to countries like France, Spain and Germany.