Canada External Debt as a % of GDP Highlights in 2020
Canada’s external debt as a % of GDP hit 138.46% in 2020, an increase of 14.4% over the previous year. Between 2010 to 2020, Canada’s external debt as a % of GDP increased by 91.0%.
Canada had one of the lowest debt-to-GDP ratios among the G7 countries (86.82% of GDP) in 2019, according to the IMF. Due to temporary COVID-19-related spending, the gross government debt-to-GDP ratio surged to 117.84% of GDP in 2020, the biggest jump in debt burden among the G7 group. A flurry of government programs – from cash transfer supports to rent subsidies to sickness benefits – have been crucial in supporting the economy through the economic slowdown.
Canada’s national debt has topped $799.71 billion for the first time in the country’s history. Since 2007/2008, combined federal and provincial net debt (inflation-adjusted) has doubled from S$799.7 billion to $1.6 billion in 2020/2021.
Outlook on Global Economy
Real GDP is measured using inflation-adjusted base year prices. Real GDP changes are a measure of economic growth and show whether there has been an increase or decrease in the volume of economic activity.
According to real GDP, the world's top five economies are the United States, China, Japan, Germany, and India. After the US, China had the largest real GDP in 2021 with a value of $12.7 trillion in 2021. With a $6 trillion real GDP during the same period, Japan came in third place globally. Germany and India are the other two largest leading economies, with real GDPs of $3.8 trillion and $2.9 trillion, respectively.
Factors Affecting the Global Economy
A rise in COVID-19 cases:
As a result of Omicron, a new variant of COVID-19, more cases have been reported worldwide, resulting in the disruption of supply chain management. However, the global vaccination drive has reduced the fatality rate from the coronavirus.
Rising Inflation and Interest Rates:
As a result of rising inflation rates in both developing and advanced economies, central banks have been forced to tighten monetary policy and raise interest rates to keep prices from rising. However, a steady increase in interest rates could cause financial distress in some economies.
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