Private sector tossed the Portuguese economy’s indebtedness to minimums of 2010

  • ECO News
  • 22 May 2018

A deleveraging in families and private companies help decrease the Portuguese economy's indebtedness in March. Assuming its weight on GDP, debt retrieves to the smallest amount since 2010.

The Portuguese economy’s indebtedness decreased in over one billion euros in March, after having reached maximums of half a year in April. This deleveraging took place especially due to the contribution of the private sector, including families and private companies, since the public sector saw its debt increasing slightly that month. According to GDP, economy’s debt retrieves to the smallest amount since the last quarter of 2010, before Portugal requested the 2011 bailout.

“In March 2018, non-financial sector indebtedness [which includes families, private companies and the non-financial public sector] stood at €719.7 billion”, the Bank of Portugal explains, in a statistical note, this Tuesday. “Compared to February 2018, non-financial sector indebtedness declined by €1.2 billion, as a result of a decrease of €1.3 billion in private sector indebtedness“, the Portuguese central bank explains.

The deleveraging in the private sector more than compensated the 100 million euros’ increase in the non-financial private sector, which ended the first quarter of the year with a 318 billion euros’ indebtedness.

This evolution was a result of “an increase in external indebtedness and vis-à-vis the general government”, the Bank of Portugal further contextualizes.

As for the reduction of the private sector indebtedness — which ascended to over 400 billion euros in March –, it was materialized in a reduction of external financing to companies.

All in all, when looking at the weight of the economy’s indebtedness considering the country’s annual wealth, the non-financial sector debt corresponded to 369.9% of Gross Domestic Product (GDP) in the end of March. It is the smallest amount since the fourth quarter of 2010, before the international bailout requested in April of 2011, when the economy’s indebtedness represented 365.61% of GDP.