Economic debt rises by $4.2 billion in 2023 but declines as a share of GDP

The Bank of Portugal today publishes updated statistics for non-financial sector debt for December 2023. The most notable of these statistics is non-financial sector debt, which increased by €4.2 billion in 2023; for public sector debt, which rose by €2.5 billion in 2023; Private corporate debt rose by 1.2% in 2023; As for private debt, it decreased by 0.4%.

Although non-financial sector debt nominally increased in 2023, GDP growth was higher. For this reason, financial sector debt has declined as a share of GDP. In 2023, non-financial sector debt (including public and private companies and individuals) fell by 28.4 percentage points to 301.3% of GDP, public sector debt fell from 145.0% to 132.7%, and private sector debt. It decreased from 184.7% to 168.6% of GDP.

Between the end of 2022 and the end of 2023, total private corporate debt rose 1.2%, 1.1 percentage points lower than the previous year. The annual rate of change in private debt showed a downward trend throughout 2023. Between the end of 2022 and the end of 2023, private debt decreased by 0.4%.

In detail, in 2023, the debts of the non-financial sector (public administrations, companies and individuals) increased by 4.2 billion euros, to 803.1 billion euros. Of this total, €449.3 billion relate to the private sector (private companies and individuals) and €353.8 billion to the public sector (public administrations and public companies).

This indicator includes loans obtained, debt securities issued by these entities (of which bonds stand out), obligations with trade credits (debts to be paid to suppliers of goods and services and advances from customers), as well as obligations with savings and treasury certificates, etc. Central management responsibilities.

Public sector debt rose by 2.5 billion euros compared to 2022. In December, the total stock amounted to 353.8 billion euros, lower than the previous month (357.2 billion), but higher than the accumulated value of debt in December of the previous year (351.3 billion). .

This increase occurred, primarily, among public administrations (12.1 billion euros) and individuals (10.1 billion euros), due to investment in savings certificates.

In contrast, public sector debt abroad and in the financial sector decreased, respectively, by €11.9 billion and €7.4 billion.

At the end of 2023, construction, real estate, trade and industry activities were the most representative sectors of economic activity in total private corporate debt. In terms of size, large companies and small enterprises had the most weight. The Development and Policy Bank says that the distribution by sector of economic activity and its size has remained relatively stable in recent years.

Private sector debt rose by 1.7 billion euros. Private corporate debt rose by €2.7 billion, mostly towards the outside world and companies (€3.3 billion and €0.7 billion, respectively). This increase was partially offset by a decrease of €1.0 billion in the financial sector.

In December, private corporate debt totaled 299.4 billion euros, compared to 299.5 billion in November and 296.7 billion in December 2022.

In contrast, private debt decreased by €1 billion, especially in the financial sector (€1.2 billion).

In December, households accumulated debts of 149.9 billion euros, less than about 150 billion euros in November, but more than they owed the previous year (150.9 billion).