As currencies across Asia tumble, central bank policy rates slide and governments cut tax rates and trade duties to stay afloat, Asia’s external debts are mounting. In the past few years, emerging Asian nations have borrowed massive sums of money predominantly from the United Kingdom, United States, Japan, Germany and France to keep their economies well oiled. A region rich in savings, emerging Asia’s foreign debt is is usually in the form of short term loans and trade credits.

While some countries like China hold a healthy 11 percent debt to GDP, South Korea, which has taken a massive beating economically, holds a whopping 40 percent of GDP as debt. China is also relatively better positioned as compared to its neighbors since its has a comfortable foreign exchange reserve of more than US$1900 to fall back on.

While external debt is getting to be a problem emerging Asian governments are grappling with, external debt as a percentage of GDP in more developed nations is an even bigger problem. According to the world fact book, external debt accounted for 99.95 percent of America’s GDP, 377 percent of the United Kingdom’s GDP, 160 percent of Germany’s GDP and 212 percent of France’s GDP, as of the end of 2007.