Picture du Jour: Public sector debt – mature vs emerging countries

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The table below, courtesy of J.P. Morgan (via U.S. Global Investors – Weekly Investor Alert), shows public sector debt of selected mature and emerging countries.

“The contrast is staggering, particularly the rate at which debt is growing in the largest economies – more than 30% this year in the U.S., Japan and Britain. This trend represents a major reversal from the past, when investors in developing economies often had to factor in large sovereign debt, high default risk and wildly fluctuating currencies. Government policy changes have contributed greatly to stronger economic fundamentals in many emerging nations, while policy moves by governments have been a source of weakness and uncertainty in the developed world,” said the report.

Investors could do a lot worse than bargaining on the outperformance of emerging market companies vs their slow-growing counterparts in mature economies for a number of years to come.

Source: U.S. Global Investors – Weekly Investor Alert. July 16, 2010.

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