Economy’s indebtedness reaches a new record of €736.6B

The Portuguese economy’s indebtedness rose by 1.7 billion euros in August, compared to July, reaching 736.6 billion euros, above the previous record of 735.8 billion euros, according to data from the Bank of Portugal released on Tuesday.

The figures show that the central bank has revised downwards the economy’s indebtedness series over the last few months since previously this figure had already exceeded 740 billion euros, which is no longer the case in this update.

It should be noted that, in the wake of the pandemic crisis that led economic agents to become more indebted, the economy’s indebtedness as a percentage of GDP soared by over 15 percentage points in a single quarter, rising from 338% in the first quarter to 354.2% of GDP in the second quarter.

In August, “In August 2020 non-financial sector indebtedness stood at 736.6 billion euros, of which 334.4 billion euros referred to the public sector and 402.2 billion euros to the private sector,” explains the Bank of Portugal. The increase in indebtedness of the economy was mainly because of the 2.3 billion euro increase in public sector debt.

This increase was partially offset by the 600 million euro reduction in private sector debt in August. But within the private sector, there were different situations: companies reduced their indebtedness by 900 million euros while individuals increased their debt by 300 million euros.