Public and Private debt;Then and now.

Data Source: Wall Street Journal

Today's chart of the day displays the debt to GDP ratio of major global economies. This ratio indicates the health of a country's balance sheet. The higher the debt level, the more difficult it would be for the sector (public or private in this case) to repay and service the debts. Evidently, over the years, the debt to GDP ratios have worsened for US, UK and Japan.

 

Looking at the chart, it is clear at first sight that since 1990 there have been major fluctuations in debt to GDP across the world. Emerging markets particularly have seen a major change, more so in private debt figures. From having access to cheap capital in the early 90s, the latter half of the decade saw the debt levels going down post the 1997 financial crisis. However, the boom period post the millennium, led the private players to continue taking on more debt given the access to cheap capital. As for developed markets, majority of this period saw an increase in private debt on the back of the housing boom. Public debt of these economies continues to be an area of concern. This has increased all the more over the past few years as governments have been making attempts to fuel growth in their respective regions.