According to the budget crown debt, as a % of GDP, appears to peak at just over 50% in 3 years. We were sitting around 20% prior to COVID-19. To give you a comparison here are some 2019 figures:
These are all much larger economies than ours, so we should be aiming to have a more conservative debt to GDP ratio.
Was it the right thing to do? What were the other options?
- The top 10 highest debt-to-GDP ratios feature Japan at 237% (#1), and some of Europe’s more concerning economies: Greece (183%), Italy (132%), and Portugal (121%).
- The world’s largest economy, the United States isn’t far behind at 106%, with China at 51% and other major economies such as the UK and Germany at 87% and 60% respectively.
- The average for the EU is 82%, which compares to the EU’s Stability and Growth Pact requiring debt-to-GDP below 60% – or at least declining to be within acceptable limits.
- The IMF’s “Advanced Economies” (which includes NZ) average 103% and “Emerging Market and Developing Economies” at 51%.
- Australia’s debt-to-GDP was reported at 41%.
These are all much larger economies than ours, so we should be aiming to have a more conservative debt to GDP ratio.
Was it the right thing to do? What were the other options?
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