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Deficit and total debt as a percent of GDP for major world economies

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Posted April 20, 2026

As of April 2026, the global fiscal landscape is defined by a push-and-pull between high defense spending, massive AI infrastructure investment, and impact of elevated energy prices.

The following table ranks the G20 major economies by their projected general government budget balance (net lending/borrowing) as a percentage of GDP for the 2026 fiscal year. Countries with the highest negative percentages represent the largest deficits.

Fiscal Deficit Ranking: Major World Economies (2026 Projection)

RankEconomyDeficit/Surplus (% of GDP)Primary Fiscal Drivers
1China-8.2%Infrastructure stimulus and property sector support.
2Brazil-7.7%Social spending and high debt-servicing costs.
3India-7.4%Continued heavy capital expenditure on infrastructure.
4United States-5.8%Rising mandatory spending and net interest outlays.
5France-4.9%Energy transition subsidies and defense modernization.
6South Africa-4.9%Support for state-owned enterprises and power grid.
7United Kingdom-3.9%Public service funding and debt interest volatility.
8Germany-3.8%Defense “Zeitenwende” and industrial energy support.
9Saudi Arabia-3.5%Vision 2030 mega-projects and oil price volatility.
10Mexico-3.5%Social programs and Pemex financial support.
11Turkey-3.4%Earthquake reconstruction and inflation mitigation.
12Indonesia-2.9%New capital city (Nusantara) development.
13Italy-2.8%Phasing out of “Superbonus” construction incentives.
14Canada-2.7%Provincial healthcare transfers and housing initiatives.
15Australia-2.4%Transitioning back to deficit as commodity prices ease.
16Japan-2.0%Demographic-driven social costs vs. tax revenue growth.
17Russia-2.0%Sustained military expenditures.
18South Korea-1.5%Semiconductor subsidies and aging population costs.
19Argentina+0.5% (Surplus)Strict fiscal austerity and subsidy removals.
20Singapore+3.3% (Surplus)High corporate tax revenue and prudent reserve policy.

Key Macro Trends for 2026

  • The Interest Burden: For advanced economies like the United States and France, net interest payments are consuming an increasing share of GDP. Projections show US interest costs reaching 3.5% of GDP this year, nearly equal to its defense budget.
  • Defense & Technology: In Europe, the -3.8% to -4.9% deficits are increasingly driven by a permanent shift in defense spending targets (approaching 2.5% to 3.0% of GDP). Globally, fiscal incentives for AI and semi-conductors have become a “baseline” expenditure for major economies.
  • The Austerity Exception: Argentina remains a notable outlier, shifting from a deep deficit to a marginal surplus following radical fiscal restructuring, though this has come at the cost of significantly suppressed domestic consumption.

Following the fiscal deficit projections, the general government gross debt-to-GDP ratio provides a clearer picture of the total accumulated debt relative to each country’s economic output.

As of April 2026, debt levels remain elevated across advanced economies due to high interest rates and the expansion of industrial and defense subsidies. The following table ranks the G20 major economies by their projected debt-to-GDP ratios for the 2026 fiscal year, based on the latest IMF World Economic Outlook data.

Public Debt-to-GDP Ranking: Major World Economies (2026)

RankEconomyDebt-to-GDP (%)Context & Fiscal Drivers
1Japan230.1%Decades of stimulus and an aging population.
2Singapore172.5%High, but primarily used for sovereign investment.
3Italy137.4%Persistent structural debt and high servicing costs.
4United States125.8%Rising interest outlays and mandatory spending.
5France118.4%Post-pandemic recovery spending and defense.
6Canada114.2%High household and provincial-level debt.
7United Kingdom103.6%Elevated public service spending vs. slow growth.
8Spain98.2%Gradual deleveraging from pandemic-era peaks.
9China96.3%Rapid rise due to local government and property support.
10Euro Area (Avg)87.8%Broad regional average across EU member states.
11Brazil84.5%High social expenditure and borrowing costs.
12India81.9%Heavy infrastructure spending to fuel 6.5% growth.
13Argentina78.4%Down from previous highs due to strict austerity.
14South Africa77.1%State-owned enterprise support (Energy/Transport).
15Germany64.0%Constrained by the constitutional “debt brake.”
16South Korea54.4%Increasing support for semiconductor and tech R&D.
17Australia51.3%Strong commodity exports helping offset debt.
18Mexico45.4%Disciplined fiscal policy relative to regional peers.
19Saudi Arabia32.1%Low debt, but rising due to “Vision 2030” projects.
20Russia19.1%Heavily sanctioned and isolated from global markets.

Critical Observations

  • The $100% Threshold: A majority of the G7 nations (Japan, Italy, US, France, Canada, UK) are now operating with debt levels exceeding 100% of their GDP. This creates a “fiscal squeeze” where a growing portion of tax revenue must be diverted to pay interest rather than funding infrastructure or services.
  • The “Investment” Outlier: Singapore remains the exception to the rule. Unlike other nations, its debt is not used to fund budget deficits but is instead issued to provide a pool of assets for the Central Provident Fund and for reinvestment by its sovereign wealth funds (GIC/Temasek).
  • China’s Trajectory: China has seen one of the fastest debt increases in the G20, rising from roughly 60% in 2019 to over 96% today, as the central government absorbs the liabilities of local governments and the struggling property sector.

Note: Published with the assistance of AI and reviewed by an editor.

Canadian GDP update by sector

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Published March 30, 2026

As of early 2026, Canada’s economy is navigating a period of modest growth, with real GDP expanding by 1.6% in 2025 and projected to grow by approximately 0.7% to 1.1% in 2026.

The economy is currently characterized by a “two-speed” performance: strong growth in energy and commodities-producing provinces, contrasted by significant headwinds in manufacturing-heavy regions like Ontario and Quebec due to trade friction and tariffs.

Canadian GDP Breakdown by Sector (2025–2026)

The following table outlines the approximate contribution of major industrial sectors to the Canadian economy and their recent performance trends.

SectorApprox. % of GDP2025–2026 Performance Trend
Real Estate, Rental & Leasing~13.5%Stable at record highs; residential cooling in ON/BC.
Manufacturing~10.0%Contracting (-2.6% in 2025); facing U.S. trade tariffs.
Mining, Oil & Gas Extraction~9.0%Strong Growth (+4.0% in 2025); upside from oil price shocks.
Finance & Insurance~7.5%Growing (+4.0% in 2025); supported by interest margins.
Healthcare & Social Assistance~7.5%Consistent growth (+2.6% in 2025); driven by demographics.
Construction~7.0%Rebounding in engineering/infra; weak residential starts.
Public Administration~6.5%Modest growth (+1.1%); strong federal spending.
Professional & Tech Services~6.0%Resilient; tech remains a significant $120B+ industry.
Wholesale & Retail Trade~10.5%Volatile; impacted by shifting consumer confidence.

Key Economic Drivers in 2026

1. The Energy Surge

Energy-producing provinces—Alberta, Saskatchewan, and Newfoundland and Labrador—are outperforming the national average. Recent supply disruptions in the Middle East have pushed oil price forecasts up significantly. Combined with the expanded capacity of the Trans Mountain and Enbridge systems, the sector is seeing material upside in production and revenue.+1

2. Manufacturing and Trade Headwinds

The manufacturing sector remains the largest detractor from national growth. Trade uncertainty and tariffs (particularly on steel, aluminum, and lumber) have led to a third consecutive year of contraction in some sub-sectors. While a U.S. Supreme Court ruling recently struck down some broad 2025 tariffs, specialized duties on automotive and metal products continue to weigh on Central Canada.

3. Housing and Construction Bifurcation

The construction sector is seeing a split in performance:

  • Engineering & Infrastructure: GDP reached roughly $170 billion in late 2025, driven by massive government projects in clean energy and transit.
  • Residential Construction: High borrowing costs and inventory backlogs have slowed new housing starts to near two-decade lows in markets like Toronto and Vancouver.

4. Services-Producing Industries

The services sector (accounting for roughly 70% of total GDP) remains the economy’s anchor. Finance, healthcare, and education have provided steady gains that helped Canada avoid a technical recession in 2025, even as the goods-producing side of the economy struggled.

The service sector, also known as the tertiary sector, includes all economic activities that produce “intangible” value rather than physical goods. Instead of extracting raw materials (primary sector) or manufacturing products (secondary sector), the service sector focuses on providing specialized skills, experiences, and logistical support to consumers and businesses.

In modern developed economies, the service sector typically accounts for 70% to 80% of total GDP.

Major Categories of the Service Sector

The sector is incredibly broad, ranging from a neighborhood coffee shop to a global data analytics firm. It is generally divided into several key categories:

CategoryDescriptionIndustry Examples
Trade & DistributionThe movement and sale of physical goods.Retail, Wholesale, Warehousing, e-commerce.
Consumer ServicesServices provided directly to individuals.Restaurants, Hotels, Tourism, Hair salons, Gyms.
Financial ActivitiesManaging, investing, and protecting money.Banking, Insurance, Real Estate, FinTech.
Professional ServicesSpecialized expertise for businesses.Legal, Accounting, Management consulting, Marketing.
Information & TechManaging data and digital communication.Software (SaaS), Telecommunications, AI services.
Public & SocialServices essential for society’s functioning.Healthcare, Education, Public safety, Government.

The Evolution: Quaternary and Quinary Sectors

As economies become more advanced, the service sector is often subdivided into two “knowledge-based” extensions:

1. The Quaternary Sector (The Knowledge Economy)

This involves the gathering, processing, and distribution of information. It is the “brain” of the economy.

  • Examples: Research and Development (R&D), Data Analytics, Scientific Research, and Advanced IT.
  • 2026 Trend: A major driver here is Agentic AI—autonomous systems that perform complex business processes without constant human oversight.

2. The Quinary Sector (High-Level Decision Making)

This represents the highest levels of organization and decision-making in society.

  • Examples: Government leaders, CEOs of multinational corporations, and top-tier scientific innovators.
  • Non-Profit: This also includes non-profit organizations and unpaid domestic labor (caregiving) which provide immense social value but are often excluded from traditional GDP calculations.

Key Characteristics of Services

To distinguish a service from a good, economists look for four specific traits:

  • Intangibility: You cannot touch or store a service. You are buying the result (e.g., a clean house or a legal defense).
  • Perishability: Services cannot be saved for later. An empty seat on a flight or an unbooked hotel room is “lost” revenue that can never be recovered.
  • Inseparability: The service is often produced and consumed at the same time (e.g., a haircut or a live concert).
  • Inconsistency: Unlike a factory-made phone, the quality of a service can vary based on who provides it and when.

Update for March 31, 2025: The Canadian gross domestic product expanded by 0.2% from the previous month in February of 2026, according to a flash estimate. This was supported by higher output in manufacturing, mining, and quarrying, and financial services, which offset contractions for agriculture and forestry. The expansion is set to extend the 0.1% growth rate from January, which was upwardly revised from the initial estimate of a stall. Growth was carried by goods producing industries (0.2%) as higher construction (2.2%) and mining and quarrying (1.2%) offset the drop for manufacturing (-1.4%). In turn, services producing industries stalled. Output increased in finance and insurance (0.5%), and retail trade (0.8%), offsetting the contraction for wholesale trade (-1.2%) and transportation and warehousing (-0.7%), which was pressured by extreme weather conditions that prevented logistics. source: Statistics Canada

As of early 2026, the United States debt-to-GDP ratio sits at approximately 125.4%

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As of early 2026, the United States debt-to-GDP ratio sits at approximately 125.4%, meaning the national debt is now roughly 25% larger than the entire annual economic output of the country.

For the first time in history, the US government is now spending over $1 trillion annually just on interest payments—more than the entire budget for the Department of Defense.

Here is the breakdown of how the U.S. compares to other major economies and the details on the interest costs.

1. Debt-to-GDP Ratio Comparison (2025–2026 Estimates)

The U.S. has one of the highest debt ratios in the developed world, surpassed significantly only by Japan and arguably Italy.

CountryDebt-to-GDP RatioContext
Japan~235%The world leader in debt, but unique because most of it is held domestically by Japanese citizens/banks, making a crisis less likely.
Italy~138%Perennially high debt; a major concern for the Eurozone.
United States~125%High & Rising. The U.S. benefits from the dollar being the world reserve currency, allowing it to borrow cheaper than others.
France~116%Struggling with budget deficits similar to the U.S.
United Kingdom~103%Has risen sharply post-pandemic and energy crisis.
China~88%**Official government debt is lower, but if you include “Local Government Financing Vehicles” (shadow debt), estimates often exceed 110%.
Canada~69%Relatively healthy compared to G7 peers (Federal & Provincial combined).
Germany~63%The “fiscal hawk” of Europe; constitutionally limits new debt.

2. The Interest Payments: A New “Trillion Dollar” Line Item

The cost to service the U.S. debt has exploded due to the combination of a massive debt pile (~$36 Trillion+) and higher interest rates (averaging 4-5% on new Treasury bonds).1

  • Current Annual Cost: ~$1.05 Trillion (Annualized Rate as of late 2025).
  • The Milestone: In FY2025, interest payments officially exceeded the Defense Budget (~$850B) and Medicare spending for the first time.
  • Why it matters: This money buys nothing—no roads, no tanks, no healthcare. It is simply the cost of renting money.2 It crowds out other government priorities; every dollar spent on interest is a dollar that cannot be spent on tax cuts or new programs.3+1

3. Why isn’t the U.S. in a crisis like Greece?

You might wonder why a 125% ratio caused a collapse in Greece (2010) but not in the U.S.

  1. Reserve Currency: The world trades in Dollars. Foreign nations need U.S. debt (Treasury bonds) to facilitate trade, creating permanent demand for U.S. debt that other countries don’t have.
  2. Control of Currency: The U.S. borrows in its own currency (Dollars). It can technically never “run out” of money to pay debts, though printing money to pay debt leads to high inflation.
  3. Economic Engine: Despite the debt, the U.S. economy (GDP) grows faster than Europe or Japan, convincing investors it can handle the load—for now.

According to advance estimates from Statistics Canada, Canada’s real GDP was essentially flat in the second quarter of 2025 (April-June), a notable slowdown from the 2.2% annualized growth seen in the first quarter.

Published August 28, 2025

Canada’s economy saw a contraction in the second quarter of 2025, following a period of modest growth earlier in the year. The latest data and forecasts point to a challenging economic environment driven by global trade uncertainty.

Recent GDP Data (Q2 2025)

  • Real GDP Growth Rate: According to advance estimates from Statistics Canada, real GDP was essentially unchanged in the second quarter of 2025 after a sharp increase in the first quarter. Monthly data showed a decline in GDP in both April and May, followed by a slight rebound in June.
  • Key Factors: The contraction was primarily driven by a sharp drop in exports, particularly to the United States. This was a direct result of trade activity being pulled forward into the first quarter to front-load shipments in anticipation of new tariffs. Sectors like manufacturing and mining, quarrying, and oil and gas extraction saw a decline, while services were largely flat.

Outlook and Forecast

The outlook for the remainder of 2025 and into 2026 is cautious, with many economists predicting a period of very slow growth or even a mild recession.

  • Bank of Canada: The Bank of Canada, in its July 2025 Monetary Policy Report, noted that while the economy has shown some resilience, GDP is estimated to have contracted in the second quarter. The Bank’s forecast is for modest growth in the second half of 2025, but it acknowledges that the unpredictable nature of global trade policy poses a significant risk.
  • Fiscal Forecasts: The Parliamentary Budget Officer’s June 2025 report anticipated that real GDP would be flat in the second quarter, largely due to the impact of tariffs.
  • General Consensus: The general consensus among major Canadian banks and other forecasters is that the economy will continue to face headwinds. A survey by the Bank of Canada found that a significant portion of market participants believe there is a notable probability of a recession in the next 12 months.

Canada’s economic performance has been a mixed bag recently, with the latest data and forecasts pointing to a period of slow or flat growth after a surprisingly strong start to the year.

Recent GDP Data

  • Real GDP Growth Rate: According to advance estimates from Statistics Canada, Canada’s real GDP was essentially flat in the second quarter of 2025 (April-June), a notable slowdown from the 2.2% annualized growth seen in the first quarter.
  • Monthly Breakdown: The flat quarterly result was a combination of monthly declines in April and May, followed by a small rebound in June. This indicates a loss of momentum in the middle of the year.

Key Factors and Industry Performance

  • Exports and Trade: The slowdown in the second quarter was largely a result of trade-related issues. Exports, particularly to the United States, fell sharply after a pre-tariff-related surge in the first quarter. This was a key drag on the economy.
  • Goods vs. Services: The goods-producing sector, including manufacturing and mining, saw declines, while the services sector remained relatively flat.
  • Household Spending: Consumer spending has held up better than expected, and residential investment has shown some signs of bouncing back. However, the overall consumer environment is seen as cautious.

Outlook and Forecast

The outlook for the Canadian economy remains uncertain, with a wide range of forecasts from different institutions.

  • Bank of Canada: The Bank of Canada has noted the volatility and uncertainty surrounding global trade. In its recent reports, the Bank acknowledges the slowdown in economic activity but continues to project a gradual path to recovery, assuming trade tensions do not escalate significantly.
  • Private Sector Forecasts: Many economists are forecasting a period of weak growth for the rest of 2025. Some anticipate growth of less than 1% for the year as a whole, while others see a risk of a mild recession, defined as two consecutive quarters of negative growth. The primary risks to the outlook are a further increase in global trade tensions and a weaker-than-expected U.S. economy, as the U.S. is Canada’s largest trading partner.

The U.S. real GDP increased at an annual rate of 3.3% in the second quarter of 2025 (April, May, and June)

Published August 28, 2025

The most recent data from the U.S. Bureau of Economic Analysis (BEA) shows that the U.S. economy’s real Gross Domestic Product (GDP) grew at a strong rate in the second quarter of 2025.

Key Figures (Q2 2025)

  • Real GDP Growth Rate: The U.S. real GDP increased at an annual rate of 3.3% in the second quarter of 2025 (April, May, and June). This was an upward revision from the initial estimate of 3.0% and represents a significant rebound from the 0.5% decrease in the first quarter of the year.
  • Nominal GDP: The nominal, or current-dollar, GDP for the second quarter was $30.33 trillion.

Key Drivers of Growth

The increase in real GDP in the second quarter primarily reflected:

  • Increased Consumer Spending: An acceleration in personal consumption expenditures was a major factor, with Americans spending more on both goods and services.
  • Decreased Imports: A notable downturn in imports contributed to the GDP increase, as imports are a subtraction in the GDP calculation. This was partly a result of businesses and consumers having stockpiled goods in the first quarter in anticipation of new tariffs.

Outlook and Forecast

While the second quarter saw robust growth, the outlook for the rest of 2025 and 2026 is somewhat mixed, with many forecasters predicting a slowdown.

  • Forecasts: According to forecasts from organizations like the Federal Reserve Bank of Philadelphia and EY, real GDP growth is expected to decelerate in the second half of 2025 and into 2026. This is largely due to the anticipated impact of trade barriers and a cautious consumer environment.
  • GDPNow: The Atlanta Fed’s GDPNow model currently projects a slower growth rate for the third quarter of 2025, with an estimate of 2.2%. This forecast is updated regularly based on incoming economic data.

The US economy contracted at an annualized rate of 0.5% in Q1 2025

Published June 26, 2025

Analysis: First-quarter growth sank under a surge of imports as companies in the United States rushed to bring in foreign goods before Trump could impose tariffs on them. Trade deficits reduce GDP. But that’s just a matter of mathematics. GDP is supposed to count only what’s produced domestically, not stuff that comes in from abroad. So imports – which show up in the GDP report as consumer spending or business investment – have to be subtracted out to keep them from artificially inflating domestic production.

The first-quarter import influx likely won’t be repeated in the April-June quarter and therefore shouldn’t weigh on GDP. In fact, economists expect second-quarter growth to bounce back to 3 per cent in the second quarter, according to a survey of forecasters by the data firm FactSet.

Chart for US GDP