Emerging fiscal trends

Genevieve Signoret

Policy: Fiscal policy

The U.S. debt-to-GDP ratio has stabilized and the deficit has come way down

Although Japan’s astronomically large deficit continues to rise in proportion to GDP, Japan’s gaping wide deficits have narrowed some.

So far the UK debt ratio’s still rising, despite austerity measures taken (in our view, too) soon after the recession

UK-style pro-cyclical fiscal policy has backfired in the euro area too. Like the UK, the EZ has brought down its deficit as a ratio of GDP but its public debt ratio continues to rise.

Germany, by taking a pro-cyclical fiscal stance (despite weak growth, it runs a fiscal surplus), has laid the full burden of providing stimulus on the ECB

Austerity before growth unsurprisingly has so far gotten Italy and France nowhere in their quests to stabilize debt ratios

In China and Mexico, debt ratios are rising but are still small by international comparison

Fiscal trends in the Fragile Five + Russia don’t alarm us