US External Debt as a % of GDP in 2020: Key Highlights
The US is the largest economy in the world. The US external debt hit 102.3% in 2020, an increase of 6.4% over the previous year. Between 2010 to 2020, the US external debt (as a % of GDP) increased by 5.6%.
Economic growth took a downturn in 2020 due to the pandemic with a negative growth of 3.5%, according to GlobalData. In 2020, inflation in the US eased to 1.2% from 1.8% in 2019, as the economy benefited from increased government spending and consumer demand fell amid lockdowns due to COVID-19. According to the IMF, the general government gross debt of the US was recorded at 133.9% of GDP in 2020, amounting to $28 trillion. A sustained budgetary deficit over the past few decades and a sharp rise in borrowing in 2020 were responsible for such a steep rise in government debt levels.
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.
The US, China, Japan, Germany, and India are the world's top five economies in terms of real GDP. The US is the largest economy in the world, followed by China. China is one of the fastest-growing economies in the world, with an annual real GDP growth rate of 8%; it grew at a CAGR of 7% between 2010 and 2021. In 2021, India’s annual real GDP growth rate was 9% and grew at a CAGR of 5% between 2010 and 2021.
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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