Emerging Nations Debt and Credit Rating Infographic

This week’s continuation of OANDA’s review of the relationship between sovereign debt levels and credit ratings is based on a group of countries collectively referred to as the “emerging economies”. This is an eclectic assortment of nations ranging from relatively primitive economies such as Pakistan or Indonesia, all the way up to China, the world’s second largest economy.

Comparing this group to the previous infographic on the debt problems facing many Eurozone countries, the term “emerging” seems somewhat misplaced. Most countries listed here have very manageable debt loads that would be the envy of several of their European counterparts. The more established countries have comparable credit ratings with Hong Kong and Singapore holding down top-level triple A approvals while most of the others fall solidly within the top tier of the “Investment” grade.

Emerging Refers to Future Potential

“Emerging” in this sense refers to the future potential for these economies to continue to grow, and nowhere is this more evident than China. In the past year, China surpassed Japan to become the world’s second largest economy and continues to expand at an annual rate far surpassing western economies. For this reason, China is being hailed as the “engine” for the global and, together with some of the other countries listed in the following illustration, is seen as the driving force for the global economy for the near term.

Sovereign income, debt, and credit by region - Emerging Economies Edition

Created by OANDA

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