World’s most indebted and distressed countries - ÜNSAL BAN

World’s most indebted and distressed countries

We have already toppled the first half of this year.

Naturally, the estimations over “what the next year will bring us” accelerated considerably.

While some are saying that next year will bring improvement, a wide segment is estimating that this flatness will increase.

“Will the U.S. Central Bank, or FED's, interest increase be good or bad for the global economy?”, “Will Greece continue their reforms?”, and “Will the declination tendency in the Chinese economy continue?”…

There are many questions to be answered.

In this process, where the predictions related with the forthcoming period are differentiating, it's discouraging to see some countries being stuck in a debt spiral.

So much that, even though in the last couple of months when our attention has been fixed on the debt crisis of Greece, we are seeing that the situations in European countries like Italy and Portugal are no different than Greece's.

Especially, we need to state that, as of Italy's 2.15 trillion dollar economic volume, the financing of a crisis that will show up in this country will not be easy like it was in Greece and Portugal. In case such an outcome is encountered, we can say that the sustainability of the union won't be that possible with the Euro as the currency.

Italy, the bomb expected to explode…

In fact, as of 2014, we can see that Italy's total public debt is over 2 trillion dollars. This amount, which represents 132.1% of the GDP, is forming a critical risk for both Italy and Europe.

In the same way, the fact that unemployment among the youngsters in Italy reached 41.5% in 2014 and the economic activity has been showing a declination tendency for a while now is not going unnoticed. If we put Italy aside, and pay attention to Japan, who is topping the list of public debt-GDP ratio, this ratio is 246.1%.

As you know, Japan has been struggling with deflation for many years. Even though it's thought that the deflation, which is a loop that is hard to break, can be exceeded by providing loan opportunities with low interest rates, expanding the government investments, implementing high price policy and increasing the consumption loans, we can see that the problem couldn't be easily surpassed and that these policies are returning to Japan as public debt.

At this point, we need to state that there are various risks for Japan, although not as much as Italy.

Turkey's condition

On the other hand, when we examine the public debt-GDP ratio from the point of our country, we can see that the ratio, which was around 80% in 2002, regressed to 30%. With 33% public debt-GDP ratio, Turkey is in a better condition compared to developed countries like the U.S., Germany and Japan, and developing countries like Brazil, South Africa and Argentina.

Moreover, in the sense of public debt-GDP ratio, while we started providing the Maastricht criteria, which is 60%, in 2004, as of today, we are at a way better condition compared to 24 member countries in the European Union.

As of the result, we can say that the public debt stock, which is of sustainable quality for some countries, has lost its sustainability for some other countries, and that these countries have become quite sensitive against internal and external shocks. At this point, due to Italy's economic volume and the dead-end Europe is experiencing, Italy is topping the list of countries that are regarded as risky. On the other hand, despite the high public debt-GDP ratio, we can say that from the point of Japan, there's a lower possibility for the debts to cause a possible fraction.


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