Debt Thermometer, 30-Mar-05: A rankings shuffle

Since I published last month's Debt Thermometer, Canada and the USA improved their debt-burden rankings among the countries I've been tracking.  Canada's debt burden actually dropped by eight points to 69% GDP.  The USA's increased slightly to 65.4% GDP, but a larger increase in Germany's debt burden (to 68%) was responsible for the USA's improvement in the rankings.  (The latest OECD data for 2004 and 2005 apparently included some nontrivial adjustments to some countries' debt and GDP numbers, causing the rankings shuffle.  If you want to examine the OECD data I used, click on the following image to enlarge it.)

The table below summarizes what changed since last month's data. 

Canada's debt burden dropped because of the tandem effects of ~3% real GDP growth combined with surplus-driven debt reduction.  In the USA, real GDP growth of 3.8% was not quite enough to offset the deficit-driven debt increase; consequently, the USA's debt burden edged up by 0.3% GDP compared to last month's data. [See footnote]

Australia's debt burden remained at 18% GDP; all other countries on the list showed debt burden increases in the latest OECD data.  (I'm still trying to reconcile an ambiguity in the UK's number, which is somewhere in the 40%-50% range; when I nail it down, I'll put the UK back on the list.) 

A minor point from the fine print: The OECD's footnote cautions us that the debt positions of the USA and Australia are both overstated relative to other countries, because of accounting differences.  However, that incongruity can't affect the list above, because Australia and the USA are already the lowest two on the list.  (When I add the UK back to the list, it will fall between USA and Australia.)

The current Debt Thermometer is below.  Click to enlarge.

[Footnote:  In general, if a country's annual GDP growth were slightly larger than its debt growth, in perpetuity, its debt burden would actually decrease slightly each year—in spite of the perpetual deficits.  It's not only an interesting fact, it is also the reason I will continue to write articles that focus on GDP growth: its history, causes, and effects.  GDP growth is overwhelmingly important to economic outcomes, especially poverty reduction, but its causes and effects get far too little airtime.]

[Origin of the Debt Thermometer]
[Full history of the USA's Debt Burden]
[What will the debt burden be in fifty years?]