How to Calculate the Debt-to-GDP Ratio
The debt-to-GDP ratio equals total government debt divided by nominal GDP, times 100, comparing the accumulated debt stock to one year of output.
The Debt-to-GDP Ratio formula
Calculator
Enter total government debt and nominal GDP to get the debt-to-GDP ratio as a percent of one year of output.
The accumulated stock, which is every past deficit minus every past surplus. Not this year's deficit.
Use nominal, not real GDP, because the debt is a current-dollar figure.
The debt equals 70% of one year of output, so $630B of borrowing sits against $900B of annual production.
- Years of output the debt equals
- 0.7
- Debt compared with one year of output
- Debt below one year of output
How many full years of national output the debt would take to repay if every dollar produced went to it.
The ratio can fall in a year the debt rises, whenever nominal GDP grows faster than the borrowing.
How to calculate Debt-to-GDP Ratio, step by step
- 1Use the debt, not the deficit. The numerator is the accumulated stock of government debt, which is every past deficit minus every past surplus.
- 2Find nominal GDP for the same year. Use nominal GDP, because the debt is measured in current dollars.
- 3Divide and rescale. Divide the debt by nominal GDP, then multiply by 100 to state the answer as a percent.
- 4Compare across years. Track the direction of the ratio, since it can fall even in a year when the debt grows.
Worked example: Debt-to-GDP Ratio
A government owes $630B and its nominal GDP is $900B, so the debt-to-GDP ratio = (630 ÷ 900) × 100 = 70%. The next year the debt grows to $648B while nominal GDP grows to $960B, giving (648 ÷ 960) × 100 = 67.5%. The debt rose by $18B and the ratio still fell, because output grew faster than the borrowing did.
Debt-to-GDP Ratio questions
Why compare debt to GDP instead of using the dollar total?
GDP measures the income a country can tax, so the ratio shows the debt relative to the ability to service it. A dollar total alone says nothing about the size of the economy carrying it.
Can the ratio fall while the debt rises?
Yes, if nominal GDP grows faster than the debt, the ratio falls even though the government borrowed more that year.
Should you use nominal or real GDP?
Use nominal GDP, since the debt is a current-dollar figure. Pairing a current-dollar debt with base-year real GDP mixes two different price levels.
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