Fox Economics Report 2025: Japan Has the Highest Debt Worldwide, with Bahrain and Sudan Among the Most Indebted Arab Countries
A report by Fox Economics has revealed its forecasts for the ten most indebted countries in the world by 2025, highlighting a stark contrast between advanced nations with robust economies and developing countries facing significant structural challenges. The report emphasizes the ratio of public debt to GDP, considering it the most accurate indicator of a country’s ability to service its debts relative to its economic size.
Japan leads the list with a public debt ratio of 242% of GDP, a substantial increase from 50% in 1990 due to significant government spending on infrastructure projects and the costs associated with an aging population. However, Japan’s debt is largely under control, being primarily owned by local investors and the Bank of Japan, which keeps borrowing costs low, despite potential future risks if interest rates rise.
Singapore ranks high with a debt ratio of 173%, a result of deliberate government policies to develop the financial market and enhance the mandatory savings system, while maintaining budget surpluses and substantial reserves. Conversely, Eritrea recorded an elevated debt ratio of 210% due to ongoing military conflicts, mandatory military service, and international isolation that limits debt relief opportunities.
The list includes two Arab countries, with Bahrain expected to reach a public debt ratio of 131% of GDP due to the collapse of oil prices between 2014 and 2016 and rising costs of economic diversification initiatives. Meanwhile, Sudan’s debt is projected to hit 128% due to chronic internal conflicts, mismanagement, and loss of oil revenues following South Sudan’s secession, which forced the government to seek external borrowing to finance the deficit.
In Europe, Greece continues to grapple with a high debt burden, although it decreased to 149% after the pandemic, due to the accumulations from the financial crisis and tax evasion. It is followed by Italy at 138%, reflecting slow growth and significant spending on pensions, while France’s debt stands at 116% due to ongoing budget deficits since 1975 and social challenges linked to austerity measures.
In the United States, the public debt is expected to reach 124% of GDP due to repeated tax cuts and spending on healthcare and pensions, amid ongoing political uncertainty regarding raising the debt ceiling. Nonetheless, management remains feasible due to the dollar’s status as a global reserve currency.
The Maldives has also entered the danger list, with its debt projected to reach 125% due to extensive borrowing for major infrastructure projects, such as the Friendship Bridge with China and airport expansions, coupled with the tourism sector’s decline due to the COVID-19 pandemic, exposing the country to future financial risks despite external support.
The report indicates that high levels of indebtedness pose real structural challenges for countries, requiring prudent fiscal policies to ensure the ability to service debts and achieve long-term economic stability.
