How Deep In Debt Is The Average American, And Is It Worse In Other Countries? | Love Money
In a world where economic pressures seem to weigh heavy on many, a closer look at household debt reveals some intriguing global trends. As inflation and interest rates climb, household debt is hitting record highs in many corners of the globe. But amidst this economic storm, some nations stand out with deficient levels of household debt relative to their GDP.
Take the Philippines, for instance. Despite widespread poverty, household debt in the Philippines accounts for just 10.1% of the nation’s GDP. However, this seemingly low figure does not reflect robust financial health but rather stems from limited access to banking services and credit. With a significant portion of the population excluded from traditional banking, mortgages and other forms of debt are less common.
A similar story unfolds in Indonesia, where household debt is a % of GDP of 9.3%. Financial exclusion plays a significant role here, with a large portion of the population lacking access to basic banking services. Despite this, Indonesia boasts a high savings-to-GDP ratio, providing a buffer against rising debt levels.
Mexico follows suit with modest household debt levels, at 16.2% of GDP. Like the Philippines and Indonesia, limited financial inclusion contributes to this low figure, with only a fraction of the population having access to credit and credit cards.
However, not all nations are experiencing such low levels of household debt. Russia, for example, has seen household debt reach record highs, driven partly by economic challenges stemming from geopolitical tensions. Despite this, household debt remains relatively low as a percentage of GDP, indicating a lower reliance on debt financing than other nations.
In contrast, the United States has the highest household debt in the world, surpassing $17 trillion. Factors such as high inflation and interest rates have increased borrowing, with credit card debt exceeding $1 trillion. However, despite this staggering debt load, households may face a less severe financial crisis compared to the 2008 recession when adjusted for inflation………..
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Rising Dough
How do differing levels of household debt across nations impact economic stability and resilience, especially in the face of rising inflation and interest rates?
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The different levels of household debt across nations have a large impact on the nation’s economic stability and resilience, the reason for this is that the economic status of the nation depends on how much people are able to spend and how much money flows. As inflation and interest rates rise, people will not be able to spend as much money because they will be paying off debt instead of putting more money into the market, this would lead to worse stability and the nations will become less resilient as the public continues to do bad financially.