The debt of the economy fell in the second quarter of 2019 to 355.2% of GDP, reaching a low of 2010.
The indebtedness of the economy ( state, public and private enterprises, and households, except the financial sector) decreased from 357.6% of GDP in the first quarter to 355.2% of GDP in the second quarter, reaching a low of 2010. Data were disclosed this Thursday, August 22, by the Bank of Portugal.
“At the end of the first half of 2019, indebtedness of the non-financial sector stood at 730.0 billion euros, of which 328.9 billion euros related to the public sector and 401.1 billion euros to the sector. reveals that the revised public debt figures are already incorporated as a result of a methodological change at the European level, which has led to an increase in amounts.
Compared to the end of 2018, the indebtedness of the economy gained 8.6 billion euros. “This increase resulted from the increase of 7.2 billion euros in public sector debt and 1.5 billion euros in private sector debt,” explains Banco de Portugal.
In the public sector, indebtedness rose mainly due to the general government (the state) and the non-resident sector, while the public financial sector decreased its indebtedness.
In the private sector, the increase in debt is due to corporate indebtedness, “which reflected the increase in financing vis-à-vis the financial sector and abroad.”
However, GDP grew more than the amount owed and the ratio decreased compared to the first quarter and fourth quarter of 2018 (see graph). At 355.2%, the ratio of debt to GDP in the second quarter becomes the lowest since the first quarter of 2010, when the ratio stood at 350.9%.
The weight of public sector debt (which is not comparable with the government debt ratio) fell from 160.9% in the first quarter to 160% in the second quarter. The weight of the private sector, which is higher, fell more, from 196.7% of GDP to 195.2%.
Within the private sector, companies saw the ratio fall from 127% to 126.1%. The ratio of household debt to GDP, of which the majority is housing, fell from 69.8% to 69.1%.
Since the peak reached in the second quarter of 2013 – when the ratio stood at 430% – the debt of the economy has been gradually falling. The weight has fallen by 75 percentage points since then.