Graphic detail

Our interactive overview of comparative debt

Wealth ebbs away a lot faster than debt. Our interactive guide shows levels of debt as a % of GDP for a selection of rich countries and emerging markets. With a few exceptions, such as Germany and Japan, most rich countries saw a huge rise in debt levels in the years running up to the crisis. Unwinding these dues will take a lot longer. In many rich countries the process of debt reduction hasn’t even started. Research by the McKinsey Global Institute shows that America has begun to pare its debt burden, although the drop is small compared with the build-up in 2000-08. But many European countries are more, not less, in hock than they were in 2008. There the hangover could last another decade or more.

Over half of China's people now live in urban areas

FOR a nation whose culture and society have been shaped over millennia by its rice-farming traditions, and whose ruling party rose to power in 1949 by mobilising its put-upon peasantry, China has just passed a remarkable milestone: its city-dwellers now outnumber its rural residents. New data from the National Bureau of Statistics show that of China’s 1.35 billion people, 51.3% lived in urban areas at the end of 2011. In 1980 less than a fifth of China’s population lived in cities, a smaller proportion than in India. Over the next ten years the government remained wary of free movement, even as it made its peace with free enterprise. Touting a policy of “leaving the land but not the villages, entering the factories but not cities”, it sought industrialisation without urbanisation, only to discover it could not have one without the other. Even now, its ratio of city-dwellers is, if anything, low for an economy at its stage of development. America reached the 50% mark before 1920. Britain passed it in the 19th century. Go further back, however, and China’s cities dazzled the world. It is likely that one thousand years ago, the Song Dynasty capital of Kaifeng was the world’s most populous city. Marco Polo, who visited China in the 13th century, claimed that Hangzhou was “the most splendid city in the world” with 13,000 bridges—although later estimates suggest the true number was 347.

A new index scores planetary bodies on their suitability for life

TWO decades ago astronomers suspected that planets might orbit other stars, but no one had ever seen one. These days hundreds are known. In a (subscription-only) paper published in the journal Astrobiology researchers, led by Dirk Schulze-Makuch of Washington State University, have come up with an index that aims to describe just how friendly to life such exoplanets might be. Tipping its hat to the possibility that aliens could have dramatically different biochemistry from earthlings, the index confines itself to measuring big-picture factors such as the presence of a solid surface, the average surface temperature, the strength of a planet's magnetosphere (which helps shield it from cosmic radiation) and the like. Unsurprisingly, Earth comes top of the list. Interestingly, though, Titan, a Saturnian moon covered in hydrocarbon lakes, takes the second spot in our solar system, ahead of Mars. There is still some doubt about whether Gliese 581g, the highest-scoring exoplanet, actually exists; but the existence of its companion world Gliese 581d, which scores nearly as highly, is uncontroversial. Sadly we won't be visiting any time soon—the Gliese-581 system is around 20 light-years from Earth, in the constellation of Libra.

Updates: One reader correctly noted that we referred to the Gliese system, when we meant the Gliese-581 system. And others have queried why Earth does not get the highest possible score of 1.0. It falls short because it lacks a significant amount of "tidal flexing". By regularly deforming planets and moons, such flexing can generate friction that helps to keep them warm (as happens, for instance on Saturn's moon Enceladus). Happily for earthlings, a perfect score appears not to be necessary for life to flourish.

The costliest natural disasters since 1980

THE world has succeeded in making natural disasters less deadly. Annual death tolls are heavily influenced by outliers, such as Haiti’s earthquake in 2010 (which killed more than 200,000) or the Bangladeshi cyclones in 1970 (300,000). But, adjusted for the Earth’s growing population, the trend in death rates is clearly downward. Economic costs, though, are rising as people and industrial activity cluster in disaster-prone areas such as river deltas and earthquake fault lines. The world’s industrial supply chains were only just recovering from Japan’s earthquake and tsunami in March when a natural disaster severed them again in October. The deluge in Thailand cost $40 billion, the most expensive disaster in the country’s history. J.P. Morgan estimates that it set back global industrial production by 2.5%. Five of the ten costliest, in terms of money rather than lives, were in the past four years. Munich Re, a reinsurer, reckons their economic costs were $378 billion last year, breaking the previous record of $262 billion in 2005 (in constant 2011 dollars). Besides the Japanese and Thai calamities, New Zealand suffered an earthquake, Australia and China floods, and America a cocktail of hurricanes, tornadoes, wildfires and floods. Barack Obama issued a record 99 “major disaster declarations” in 2011.

See full article

Burgernomics shows Switzerland has the most overvalued currency

THE ECONOMIST's Big Mac index is based on the theory of purchasing-power parity: in the long run, exchange rates should adjust to equal the price of a basket of goods and services in different countries. This particular basket holds a McDonald's Big Mac, whose price around the world we compared with its American average of $4.20. According to burgernomics the Swiss franc is a meaty 62% overvalued. The exchange rate that would equalise the price of a Swiss Big Mac with an American one is SFr1.55 to the dollar; the actual exchange rate is only 0.96. The cheapest burger is found in India, costing just $1.62. Though because Big Macs are not sold in India, we take the price of a Maharaja Mac, which is made with chicken instead of beef. Nonetheless, our index suggests the rupee is 60% undercooked. The euro, which recently fell to a 16-month low against the dollar, is now trading at less than €1.30 to the greenback. The last time we served up our index in July 2011, the euro was 21% overvalued against the dollar, but it is now just 6% overvalued. Other European currencies have also weakened against the dollar since our previous index, notably the Hungarian forint and Czech koruna, which have fallen by 23% and 16% respectively. Six months ago both currencies were close to fair value, but they are now undervalued by 37% and 18%.

For the full data set see here.

More than $2 trillion in taxes is collected annually by America's Internal Revenue Service (IRS). The tax gap, the amount of tax liability that is not paid on time by corporations and individuals in America, was $450 billion in 2006 according to a new report by the IRS. The last "tax gap" report, which looked at the 2001 tax year, estimated some $345 billion was unpaid. In terms of compliance, little has changed since the last report; still only around 83% of tax revenue is paid voluntarily and on time. As in 2001, underreporting makes up the majority of the tax gap, primarily as individuals understate their incomes, take improper deductions or overstate their business expenses. After late payments and enforcements are taken into account, an estimated $65 billion of the $450 billion total will eventually be recovered.

More bad news for Europe's troubled economies

THE new year was a bad time for a public figure to die. Kiro Gligorov, the first president of independent Macedonia, was rather ignored when he died on January 1st: the foreigners who might normally be interested in such an event were occupied trying to work out whether nuclear war was imminent on the Korean peninsula. Macedonia may remember Mr Gligorov fondly, but the country is in a mess. It comes top of our misery index, which combines two powerful indicators of economic gloom—unemployment and inflation. Out-of-control price rises are mainly a problem in oil-rich countries with loopy economic management such as Venezuela and Iran (and, to a lesser degree, Russia). One striking feature of the updated index, however, is that high unemployment now places a number of rich European countries right up there with the most miserable countries in the world—or at least in the 92 for which we have good data.

THE outlook for GDP growth in the euro area has deteriorated sharply since September, when the sovereign-debt crisis escalated. Then our poll of forecasters thought the economy would grow by a mere 1%. They are now predicting the 17-nation economy will shrink by 0.5% this year. Still caught in the crisis, the risk of default, contagion and a break-up of the union, together with fiscal austerity and exports declining, our pollsters reckon Germany’s economy will barely grow this year; France, Spain and Italy will shrink by 0.3%, 0.8% and 1.1% respectively. Inflation however, which fell last month, is forecast to stay around the European Central Bank’s target of below but close to 2%. Expected further interest rate cuts could help stimulate the economy. Our pollsters are more optimistic about growth in America this year. Indicators show the economy was picking up and employment rising towards the end of last year.

Each month we ask a group of economists their predictions for GDP growth, inflation and current-account balances; our latest poll can be found here.

Which economies will grow and shrink the fastest in 2012?

LIBYA’S economy will grow faster than any other in 2012, according to the Economist Intelligence Unit’s forecasts, boosted by reconstruction following the fall of Muammar Qaddafi’s regime. The surge is a bounce-back from an even more precipitous slump while war raged. In Iraq, post-conflict chaos has delayed recovery but performance in 2012 may mark the start of something new. Mongolia is enjoying a mining boom and will benefit from investment in that sector; Angola and Niger will gain from relatively high commodity prices. China will continue to experience robust growth; this is fortunate since demand generated by the world’s second-largest economy will counteract some of the drag from the rich world. As for the fastest shrinkers, Europe’s economies feature prominently, as they remain embroiled in the Euro crisis. But Sudan will suffer the heaviest economic contraction, having lost three quarters of its oil reserves to South Sudan when that country seceded in July.

Charting the year

Finance and economics in 2011 explained through charts

IT STARTED off OK, but thanks largely to Europe, 2011 turned out to be a pretty dismal year. The Economist has sorted through the mess and selected nine charts that sum up 2011. 

- Click the image on the right to access the charts -

Our most popular print edition articles of the year

WE PRESENT an interactive "tree map" of top stories from the 2011 print edition, in which the size of each box represents relative popularity (measured in page views).
The failing economies of America and Europe stand out here, a grim reflection of the prevailing tale of 2011. Deposed leaders also feature: Silvio Berlusconi wins top spot; the death of Osama Bin Laden also proved popular. Colonel Qaddafi's capture just failed make the cut, however. In fact, our extensive coverage of the Arab spring is absent from the list. This year, it seems, readers were more interested in economic collapse than in the fall of dictators. In the long-run, the latter will hopefully prove to have been the more important theme of 2011.

Note: This graphic concentrates purely on articles from The Economist print edition. Other online content that would otherwise have made this year's list includes:

Kal's Cartoon, Which MBA, Daily charts: "US equivalents" & "Drinking habits", and the Economist Quiz on Facebook.

Despite not seeing double-digit economic growth for over ten years, and been hit hard by the recession in 2009, Russia has had an average annual growth rate since 2000 of over 5%. And according to the OECD, a mostly rich-country think-tank, Russia’s economy will expand by 4% this year and next. While inflation is set to be over 8% this year, high for a middle-income country, at the beginning of the 2000s, it was over 20%. The unemployment rate has followed a similar pattern and is now below the OECD average. Labour force participation rates are also high. But perhaps Russia’s most striking achievement is its fiscal performance. In contrast to persistent budget deficits in the 1990s, up until recently Russia enjoyed a series of surpluses, thanks to high and rising oil prices, economic growth, fiscal reform and prudent management. Revenues from oil and gas, which by 2008 accounted for a third of all government revenues (some $200 billion), were used to repay external debt and build up assets in a stabilisation fund, which was recently used to inject a fiscal stimulus. But Russia's budget balance is dependent on the oil price. Strip oil out and its public finances have been deteriorating since 2005. Reducing the public budget’s dependence on oil revenues would further modernise its economy. The OECD would also like to see a more business-friendly environment and effective social policies to reduce income inequality.