Greek Prime Minister Antonis Samaras may be touting what he calls a burgeoning “success story” for the country and hopes of an economic rebound, but the numbers show otherwise. Besides the record unemployment rate of 27.6 percent and some 20 percent of people in poverty, two bailouts of $325 billion from international lenders hasn’t reduced the staggering debt, and there are growing signs it will never be repaid.
Now, Forbes magazine notes, Greece is the most indebted country in the world, according to the latest data released by the International Monetary Fund, which, along with the European Union and European Central Bank makes up the Troika putting up the rescue loans.
The most dominant countries in history are the most indebted nations today, according to the latest data released by the International Monetary Fund. The world’s most indebted country is ancient power Greece, with general government net debt that is 173% of its GDP.
Other historic superpowers in the top 20 include Italy, Egypt, Portugal, Spain, France, the United Kingdom, Japan and the United States. Greece is in the most trouble, not only because it has a far higher debt-to-GDP ratio than any other country but also because its GDP is still shrinking. The Greek economy is expected contract for the sixth straight year, this time by 4.2%.
“If your income is going down every year, then how are you going to repay?” said Matthew Lynn, author of Bust: Greece, the Euro and the Sovereign Debt Crisis. “Basically you aren’t, until you can turn it around.”
The IMF predicts Greece’s GDP will stop shrinking in 2014 and will grow at a rate of about 3% annually the following four years. Austerity measures have slashed massive Greek deficits, but the country has a long way to go to make a dent in its debt.
Some of Greece’s neighbors are mired in economic crises of their own. Italy, Portugal and Spain are also expected to have shrinking GDPs in 2013, but like Greece, are expected to begin slowly rebounding in 2014.
Japan is second on the list behind Greece, with debt that is 140% of its GDP. Japan, which has the world’s third-largest economy behind only the United States and China, is expected to grow less than 2% annually through 2018.
Five other countries — Lebanon, Portugal, Grenada, Italy and Ireland — also have national debts that surpass their GDPs. “Sooner or later, they’ll probably have to default,” Lynn said. “The general rule is that once it gets above 100% of GDP, that’s a problem. It’s probably not repayable, unless you have really fast growth.”
The United States ranks 10th on the list, with debt that is 87% of its GDP. But it has the most debt of any country in absolute terms, an estimated $14.6 trillion in general government net debt, double the debt of second-place Japan. U.S. debt has grown $10 trillion in the last decade.
Emerging nations tend to have less debt than traditional powers. Brazil, for example, is the seventh-largest economy in the world but has debt that is 34% of its GDP. The IMF does not list debt-to-GDP ratios for every country, including emerging powers like China, India and Russia. But IMF data does show that China is the world’s third-best saver, saving 51% of its GDP.
“The debt, and the developed world’s willingness to borrow to fuel growth, is an indicator of the wildcat, Promethean energy that has driven our quest for economic growth,” said China expert Orville Schell. “China is forging a completely new system and playbook for which there is no operating instructions.”