It Is Europeans Who Are Mostly In Debt

If you think it is Americans who are to blame as having borrowed too much more than they could afford, then think twice!

Take a look at the top external debt (in US dollars) per capita data by countries, these data apparently show that many European countries are in ridiculously deeper debt.

Among these 18 countries, Monaco and Ireland are more than 10 times of their GDP could produce. Only three non-European countries are on the list, those are Qatar, Australia and the USA.

People in rich country do have more purchasing  power to leverage their debt. For such fair comparison, I took their high GDP per capita to normalize their high debt. So here is the list of Debt per capita as percentage of GDP per capita (the debt-to-GDP ratio).

Again, after the normalization, these Europeans are still on the top of the list. Taking Monaco as example, people in Monaco share the average debt as high as over 18 times as their GDP contribution. As I expected, two poor countries, Zimbabwe and Liberia, are also borrowing money around as twice what they could produce.

With such per-capita GDP normalization, it is equally fair to judge the debt of each country, no matter they are poor or rich. So I plot a scatter chart of all countries in the whole world to examine their normalized per-capita debt in relate to their GDP contribution. If every country borrows money at the same level as the same ratio to their GDP contribution, the fit line should be flat.

However, the figure turns out to be upper bend to many rich countries. It is obvious that many rich countries, especially those in Europe, are responsible for their deeper debt as over borrowing money externally.

In a huge contrast, Asian countries, such as Japan, South Korea, Singapore, China as well as India only show their small fraction of debt (under 30%) in comparison to their GDP.