Economic debt rose to 368.8% of GDP, a maximum of three years – public finance

Economic debt rose to 368.8% of GDP, a maximum of three years - public finance

The Portuguese bank announced that the debt of the Portuguese economy worsened again in December, touching a new historic high of 745.8 billion euros.

This increase was raised to a value equal to 368.8% of GDP on state, corporate and household debt, a significant increase compared to the end of 2019 (336.8% of GDP).

During the epidemic year, the debt burden of the Portuguese economy rose by more than 30 percentage points, with various sectors of the economy increasing debt to respond to the epidemic. According to Banco de Portugal, from this 32 percent increase, 19.2 points are associated with the fall in GDP.

Despite the significant deterioration, the Portuguese economy has already recorded that it still owes weight when measuring GDP, which is a very accurate way to measure the debt of an economy. In mid-2013, it exceeded 420% of GDP.

The deterioration in the fourth quarter (fourth in a row) boosted the rate for peaks in the third quarter of 2017, reversing the valuable trend that the Portuguese economy had recorded between 2013 and 2019.

Always strong annual boom
The annual increase of more than 30 percentage points is most pronounced since Banco de Portugal collected this data in 2007. In 2012 there was a strong annual increase, which rose by almost 30 percentage points to more than 420% of GDP.

It has been declining every year since then, and the rise of 2020, when weighed on GDP, marks the end of a seven-year continuum in improving the debt of the Portuguese economy. In addition, the reduction over the past five years has always been above 10 percentage points.

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The debt of the Portuguese economy is slightly higher than what is recorded worldwide. According to the Institute of International Finance, total global debt will reach $ 281 billion by the end of 2020.

This value is more than 355% of world GDP, an increase of 35 percentage points compared to 2019. Thus, although the debt of the Portuguese economy was higher than the world average, by 2020 it had increased very little.

As for the nominal value of non-financial sector debt, it rose to more than 27 billion euros in 2020, completing the year to renew the record reached in several months last year.

Banco de Portugal describes the increase as a 24.9 billion euro increase in public sector debt and a 2.5 billion euro increase in private sector debt.

And according to Banco de Portugal, “the increase in public sector debt was reflected in the increase in funding provided by all financial sectors, particularly the financial sector (.6 16.6 billion), followed by public administrations and foreign countries.”

In the private sector, individual debt increased by 3 2.3 billion, while private sector debt increased by 200 200 million.

Home loan was 69.6% of GDP for the year, compared to 65.2% at the end of 2019. Among companies, debt rose from 122.7% of GDP in 2019 to 129.5% of GDP last year.

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