Gross Domestic Product (GDP) measures the total value of goods and services produced within a country. The ratio of a government's debt to the country's GDP makes it possible to compare relative debt levels across many different countries. A common question governments with high debt-to-GDP ratios often struggle to address (and usually deal with incorrectly) is whether to spend less in order to service its debt or to actually increase spending to boost economic growth, thus raising tax revenue. One of the most under-the-radar issues facing the global economy right now is the ever-rising national debt, brought about by the last global crisis and the aftermath thereof. While economic growth and record-low interest rates have made it easy to service existing government debt, it’s also created a situation where global government debt has grown to over $66 trillion. However, in the event of a recession or a rapid reversal of interest rates, debt levels could gain attention very quickly again, exacerbated by the potential for investors to lose faith in a country’s ability to ever repay its debt obligations.
Data Source: International Monetary Fund. Data is up to date as of April 2019.