Emerging fiscal trends

Genevieve Signoret

Policy: Fiscal policy

The U.S. debt-to-GDP ratio has stabilized and the deficit has come way down
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Although Japan’s astronomically large deficit continues to rise in proportion to GDP, Japan’s gaping wide deficits have narrowed some.
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So far the UK debt ratio’s still rising, despite austerity measures taken (in our view, too) soon after the recession
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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.
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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
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Austerity before growth unsurprisingly has so far gotten Italy and France nowhere in their quests to stabilize debt ratios
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In China and Mexico, debt ratios are rising but are still small by international comparison
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Fiscal trends in the Fragile Five + Russia don’t alarm us
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