In this article, we take a look at the 20 rich countries with best debt to GDP ratio. You can skip our detailed analysis and go directly to the 5 Rich Countries with Best Debt to GDP Ratio.
Global Debt
Debt can provide short-term benefits, but it can lead to financial distress in the long term. For developing economies, debt becomes a genuine concern in which they usually find themselves vulnerable. As per World Bank’s research, emerging and developing economies have been the worst hit by debt crises. According to the IMF’s April 2023 World Economic Outlook, the world’s public debt fell from 100% of GDP in 2020 to 92% of GDP in 2022. The drop in public debt was driven by strong real GDP growth of economies, inflation surprises, and termination of fiscal support programs related to the COVID-19 pandemic.
However, things have drastically turned around in 2023 and we face real-world challenges such as war crises in the Middle East and global economies suffering from high inflation. The global debt has reached a whopping $307 trillion in the third quarter of 2023 compared to $289 trillion in the third quarter of 2022, as per a report by the Institute of International Finance (IIF). During Q3 2023, the debts of developed countries soared to $206 trillion and the debts of developing countries reached to $101.3 trillion. As per the IIF, the personal debts and public sector debts were at $57.9 trillion and $88.1 trillion, respectively. The non-financial companies’ debts stood at $91.1 trillion and financial institution’s debts were $70.3 trillion during Q3 2023. The developed countries that had the highest contribution to the global debt in Q3 2023 included the US, Japan, France, and the UK. While, developing countries such as China, India, Brazil, and Mexico, added the most to the global debt in Q3 2023.
Rich countries have the capacity to cater to their debt issues. The countries that have the lowest debt-to-GDP ratio are Brunei, Kuwait, Turkmenistan, and Azerbaijan, among others. Rising inflation and interest rates should come into play in slowing down the debt for developed countries. However, it is the instability of economies to follow up with the crises they suffer post-COVID, followed by the Russia-Ukraine war. According to the IMF’s October 2023 World Economic Outlook, global growth is expected to slow to 3% in 2023 and continue at a rate of 2.9% in 2024. Advanced economies are projected to slow from 2.6% growth in 2022 to 1.5% in 2023 and further slow down to 1.4% in 2024. Emerging and developing economies are expected to face a modest decline in growth from 4.1% in 2022 to 4% in 2023. The global inflation will slow down from an expected 6.9% in 2023 to 5.8% in 2024. In most cases, core inflation is not expected to return to the target until 2025.
Companies in the Richest Economies
Rich countries with best debt to GDP ratios have strong economies due to thriving markets. The leading global economies are driven by some prominent industries such as oil and gas, agriculture, and IT, among others. Countries such as Russia and Saudi Arabia are dependent on their energy resources. Russian oil firm, Public Joint Stock Company Gazprom (MCX:GAZP) and Saudi oil firm, Saudi Arabian Oil Company (TADAWUL:2222) are two of the largest oil companies in the world.
Gazprom (MCX:GAZP) is the most valuable Russian company in the world. China is one of the largest clients of Russia’s state-owned energy company. Gazprom (MCX:GAZP) will become the largest supplier of gas to China after Power of Siberia reaches its full capacity. On October 19, Gazprom (MCX:GAZP) reported that the company signed a Supplementary Agreement to the Sales and Purchase Agreement with China National Petroleum Corporation (CNPC). As per the agreement, Gazprom (MCX:GAZP) will supply Russian gas through the eastern route. In addition, Gazprom (MCX:GAZP) will provide gas until the end of 2023. The Chairman of the Gazprom Management Committee, Alexey Miller, stated:
“With regard to all matters of cooperation in the gas sector, the negotiations were very constructive and substantive. Throughout the current year, the volumes of gas supplies via Power of Siberia have already risen by 46.6% versus the same period of last year. Gazprom is ready to further ramp up the supplies and reliably provide its Chinese partners with natural gas via the agreed routes.”
Saudi Arabia’s largest company, Saudi Arabian Oil Company (TADAWUL:2222) plays a big role in the country’s economy. On November 19, Arab News reported that Saudi Arabian Oil Company (TADAWUL:2222) made two natural gas field discoveries, the first at the Hanifa reservoir in the Al-Hiran-1 well and the second at the Al-Mahakek-2 well. Saudi Arabian Oil Company (TADAWUL:2222) has made several other discoveries, adding to the company’s overall natural gas reservoirs. These discoveries will complement Saudi Aramco’s strategic plan to enhance its gas production by more than 50% from 2021 levels and aims to meet domestic demand by 2030.
Nestlé S.A. (OTC:NSRGY) is one of the major contributors to the global economies. The Swiss multinational food and drink processing conglomerate has more than 340 factories in 77 countries. Nestlé S.A.’s (OTC:NSRGY) products are sold in 188 countries. Nestlé S.A. (OTC:NSRGY) is working on sustainable production and supporting ESG. On November 16, Nestlé S.A. (OTC:NSRGY) announced that it is investing £7 million in a plastic recycling plant, which is set to open in Durham, UK. Nestlé UK and Ireland have agreed to provide a loan of £7 million to Impact Recycling, the company that will set up the plastic recycling plant. The plant is expected to be operational in late Summer 2024. Nestlé S.A. (OTC:NSRGY) UK and Ireland’s Head of Packaging, Sokhna Gueye, said:
“In the UK and Ireland, our efforts continue at pace to ensure as close to 100% of our packaging is designed for recycling by 2025, and we continue to work towards all of our packaging being recyclable or reusable. It is fantastic to see our packaging given a second life, and we are looking at many partnerships to help encourage the collection and recycling infrastructure in the UK.”
Now let’s have a look at the 20 countries with best debt to GDP ratio.
20 Rich Countries with Best Debt to GDP Ratio
Our Methodology
To compile the list of countries with best debt to GDP ratio, first, we gathered the top 50 richest countries based on GDP (PPP). Then we checked the central government gross debt percentage of GDP for those countries. We took the top 20 countries with the minimum gross debt percentage of GDP. The figures are from 2023 and were sourced from the International Monetary Fund (IMF) database. The list is ranked in ascending order of the debt to GDP ratio.
The central government’s gross debt percentage of GDP signifies all kinds of debt liabilities of a country against the GDP. This gives us the debt to GDP ratio of a country.
20 Rich Countries with Best Debt to GDP Ratio
20. Poland
Debt to GDP ratio: 49.80
Officially known as the Republic of Poland, the Central European country consists of 16 administrative provinces. Poland has a GDP of $1.71 trillion and ranks among the rich countries with best debt to GDP ratio.
19. Netherlands
Debt to GDP ratio: 49.50
The Netherlands is located in Northwestern Europe. The country has a GDP of $1.3 trillion and a debt to GDP ratio of 49.50. The Netherlands makes it to our list of the rich countries with best debt to GDP ratio.
18. Iraq
Debt to GDP ratio: 49.20
Iraq is one of the most crucial economies in the Middle East with rich natural resources. Iraq has a GDP of $508.97 billion and a debt to GDP ratio of 49.20.
17. Czech Republic
Debt to GDP ratio: 45.40
The Czech Republic, also known as Czechia, is located in Central Europe. The Czech Republic’s GDP stands at $539.32 billion and with a debt to GDP ratio of 45.40, it ranks 17th among the rich countries with best debt to GDP ratio.
16. Ireland
Debt to GDP ratio: 42.70
Ireland is an island country located in Northwestern Europe along the North Atlantic Ocean. With a GDP of $722.93 billion and debt to GDP ratio of 42.70, Ireland ranks among the rich countries with best debt to GDP ratio.
15. Switzerland
Debt to GDP ratio: 39.50
One of the most developed countries in Europe, Switzerland is situated at the confluence of Western, Central, and Southern Europe. Switzerland has a GDP of $788.34 billion and debt to GDP ratio of 39.50.
14. Bangladesh
Debt to GDP ratio: 39.40
Bangladesh is one of the emerging economies in South Asia. The country has a GDP of $1.48 trillion and debt to GDP ratio of 39.40. Bangladesh ranks 14th on our list of the rich countries with best debt to GDP ratio.
13. Indonesia
Debt to GDP ratio: 39
Located in Southeast Asia and Oceania, Indonesia lies between the Indian and Pacific oceans. With a GDP of $4.39 trillion and debt to GDP of 39, Indonesia is one of the richest countries with best debt to GDP ratio.
12. Nigeria
Debt to GDP ratio: 38.80
Situated in West Africa, Nigeria is one of the richest African countries. Nigeria has a GDP of $1.37 trillion and a ratio of 38.80 making it one of the rich countries with best debt to GDP ratio.
11. Chile
Debt to GDP ratio: 38.40
Officially called the Republic of Chile, the country is located in the western region of South America. Chile has a GDP of $597.52 billion and a debt to GDP ratio of 38.40. Chile makes it to our list of the rich countries with best debt to GDP ratio.
10. Türkiye
Debt to GDP ratio: 34.40
Officially the Republic of Türkiye, the old name of the country was Turkey. Türkiye’s GDP of $3.61 trillion and a ratio of 34.40 make it one of the richest countries with best debt to GDP ratio.
9. Vietnam
Debt to GDP ratio: 34
Vietnam, officially the Socialist Republic of Vietnam, is one of the richest countries with best debt to GDP ratio. Vietnam has a GDP of $1.43 trillion and debt to GDP ratio of 34.
8. Peru
Debt to GDP ratio: 33.90
Located in South America, Peru is among the rich countries with best debt to GDP ratio. Peru has a debt to GDP ratio of 33.90 and a GDP of $548.47 billion.
7. Iran
Debt to GDP ratio: 30.60
Iran is one of the most important economies in the Middle East. Iran’s GDP of $1.73 trillion and the ratio of 30.60 make it one of the richest countries with best debt to GDP ratio.
6. United Arab Emirates
Debt to GDP ratio: 29.40
One of the strongest economies in the world, the United Arab Emirates is a federation of seven states. The country has a GDP of $895.17 billion and debt to GDP ratio of 29.40. The United Arab Emirates ranks sixth among the rich countries with best debt to GDP ratio.
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Disclosure: None. 20 Rich Countries with Best Debt to GDP Ratio is originally published on Insider Monkey.