Debt-to-GDP ratio: Difference between revisions

In [[economics]], the '''debt-to-GDP ratio''' is the [[ratio]] between a country's [[government debt]] (measured in units of currency) and its [[gross domestic product]] (GDP) (measured in units of currency per year). A low debt-to-GDP ratio indicates an economy that produces and sells goods and services sufficient to pay back debts without incurring further debt.<ref>{{Cite web|last=Kenton|first=Will|title=What the Debt-to-GDP Ratio Tells Us|url=https://www.investopedia.com/terms/d/debtgdpratio.asp|access-date=2020-09-22|website=Investopedia|language=en}}</ref>. Geopolitical and economic considerations – including [[interest rates]], [[war]], [[recession]]s, and other variables – influence the borrowing practices of a nation and the choice to incur further [[debt]].<ref name=StLouisFed>{{cite web|url=http://www.stlouisfed.org/publications/cb/articles/?id=874|title=Budget Deficits and Interest Rates: What is the Link?|publisher=Federal Bank of St. Louis}}</ref> It should not be confused with a '''deficit-to-GDP ratio''', which, for countries running budget deficits, measures a country's annual net fiscal loss in a given year ([[Government budget balance|total expenditures minus total revenue]], or the net change in debt per annum) as a percentage share of that country's GDP; for countries running budget surpluses, a ''surplus-to-GDP ratio'' measures a country's annual net fiscal ''gain'' as a share of that country's GDP.