Okuzeka
Economics vocabulary · Fiscal Policy and Public Finance

Default

Meaning in economics, with examples

/dɪˈfɔːlt/verbCommon term

In economics, default means: To fail to pay interest or repay a loan or bond on time; the noun default describes this failure.

In Turkish: temerrüde düşmek, borcunu ödeyememek

How it is used

Countries, companies and households can default on their debts. A sovereign default, by a government, is rare and serious and usually leads to debt restructuring and loss of access to markets; Argentina's default in 2001 is a well-known case. Rating agencies assess the risk of default.

Example sentences

  1. The company defaulted on its bonds after sales collapsed.

  2. Investors fear the country could default on its foreign debt next year.

Common collocations

  • default on a loan
  • default on its debt
  • sovereign default
  • risk of default
  • credit default swap
  • public debtThe total amount of money that a government owes to lenders at home and abroad, built up over years of borrowing.
  • debt-to-GDP ratioA country's public debt divided by its annual GDP and shown as a percentage; it shows how heavy the debt is compared with the size of the economy.
  • interest rateThe price of borrowing money, shown as a yearly percentage of the amount borrowed; for savers, it is the return they earn on deposits.
  • emerging marketA middle-income economy that is growing and industrialising quickly and opening up to foreign trade and investment, such as Brazil, India or Türkiye.

This word in other fields

The same English word can have a different meaning in another field:

More terms: Fiscal Policy and Public Finance

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This page explains English vocabulary for learners. It is not financial advice.