Difference between revisions of "Debt-to-GDP ratio"

From ACT Wiki
Jump to: navigation, search
(Layout.)
(Layout.)
 
Line 1: Line 1:
 
''Public sector finances.''
 
''Public sector finances.''
  
The ratio between government debt and its gross domestic product (GDP).
+
Debt-to-GDP ratio is the ratio between a country's national debt and its gross domestic product (GDP).
  
  
This ratio is used investors, leaders, and economists to gauge a country's ability to pay off its debt.  
+
This ratio is used to gauge a country's ability to service its debt.  
  
A high ratio means a country is not producing or earning enough to service its debt. A low ratio means there is plenty of economic activity to generate the value to meet the commitments.
+
A high ratio means a country is not producing or earning enough to service its debt.  
 +
 
 +
A low ratio means there is plenty of economic activity to generate the value to meet the commitments.
  
  

Latest revision as of 22:33, 20 May 2020

Public sector finances.

Debt-to-GDP ratio is the ratio between a country's national debt and its gross domestic product (GDP).


This ratio is used to gauge a country's ability to service its debt.

A high ratio means a country is not producing or earning enough to service its debt.

A low ratio means there is plenty of economic activity to generate the value to meet the commitments.


Ongoing deficits in the UK
"The net effect of the coronavirus impact and the policy response is likely to be a sharp (but largely temporary) increase in [UK] government borrowing that will leave public sector net debt permanently higher as a share of GDP...
Before the impact of the coronavirus became clear, the government was content to run an ongoing deficit that would broadly stabilise the debt-to-GDP ratio over the medium term rather than reduce it – a judgement that it will no doubt re-visit in the wake of the current crisis."
The UK OBR’s coronavirus analysis, 14 April 2020


See also