France External Debt as a % of GDP Highlights in 2020
France external debt as a % of GDP debt hit 266.9% in 2020, an increase of 11.1% over the previous year. Between 2010 to 2020, France’s external debt as a % of GDP increased by 31.0%.
The country’s public finances deteriorated in 2019 and 2020 but the government is working to strengthen them. The country’s current account deficit needs to be narrowed further by reviving competitiveness in the tradable sectors. Rising household debt and overvalued house prices are also risks to the economy. The huge stimulus packages are expected to increase the current account deficit and government debt in the medium term. The deficit increased to 9.9% of GDP in 2020 due to increased government expenditure to combat the COVID-19 pandemic.
The rising household debt makes consumers in the country susceptible to interest rate shocks and changes in expectations of future income. According to the Bank of France, household debt accounted for 68.4% of GDP in Q4 2020 compared to 59.5% of GDP in Q4 2018, marking a tremendous rise in two years. The COVID-19 outbreak, accompanied by uncertainty about the future, may lead to increased sensitivity in the household sector.
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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