2 min read –
DEBT-TO-GDP Ratio Explained –
Comparing West vs East –
Indonesia: 41%
France: 116%
The debt-to-GDP ratio is the ratio of a country’s public debt to its GDP, expressed as a percentage. It is essential for gauging a nation’s ability to repay its debts.
A low ratio, typically below 60%, suggests an economy produces enough goods and services to cover its debt without needing more borrowing.
A high ratio, especially above 100%, may signal a risk of default during downturns.
Visual Capitalist highlights that countries above 77% are more vulnerable in prolonged recessions.
This ratio reflects fiscal sustainability. It helps policymakers, investors, and analysts assess whether a country can manage its debt, especially in times of recession, rising interest rates, or geopolitical tensions.
Higher ratios are more concerning in developed economies with slow growth. Emerging markets may tolerate higher ratios if their growth remains strong.
Let’s look at Japan, Singapore, France, and Indonesia:
Japan: At 257%, Japan has the world’s highest ratio. It was the first advanced economy to pass 200%, marked in dark red in the infographic. This stems from decades of deficit spending, low growth, and an aging population.
Singapore: At 130%, its ratio is above the 100% warning level. This may reflect infrastructure investment and economic strategy.
France: At 116%, the ratio reflects post-crisis borrowing and social spending. The risk rises if the economy slows.
Indonesia: At 41% (2021), it stands out as fiscally sound. This low ratio suggests manageable debt, possibly thanks to conservative policy or strong growth. Compared to Japan, Singapore, and France, Indonesia has less pressure to address debt levels.
Yet, careful management is needed amid global uncertainty and rising borrowing costs. Indonesia’s position appears sustainable, but emerging markets must stay vigilant against external shocks.
This analysis underscores the need for tailored policies:
– Countries like Japan may need growth strategies or spending cuts.
– Indonesia can use its fiscal room for development investment.
A rising debt-to-GDP ratio increases default risk and can trigger a sovereign debt crisis, when a country can’t meet its debt payments.
Main causes
– High Debt-to-GDP Ratio (> 77%)
– Economic Downturns
– Rising Interest Rates
Historical cases
– Latin America (1980s)
– Asia (1998)
– Europe (2012): Greece, Ireland, Portugal.
As of May 12, 2025, the IMF warns that 70 countries risk debt distress. Developing countries are especially exposed due to post-COVID pressures and higher interest rates.
Near crisis: Argentina, Ghana, Pakistan.
Regional averages
– ASEAN: 63%
– ASEAN-1 (excl. Singapore): 50%
– EU: 83%
Where could the next debt crisis emerge?
– USA?
– Europe?
– Asia?
We are CINTASIA, we help you understand economics to successfully export your technology and industrial equipment to Indonesia.
PS: USA Debt-to-GDP: 122% (2023)
Picture: Visual Capitalist
Sources: Cintasia, Grok