The indebtedness of all economic agents (excluding banks) reached a record high of 745.77 billion euros at the end of 2020.
The indebtedness of the economy has reached a record high of 745.77 billion euros at the end of 2020, interrupting the downward trend experienced in previous years. The accumulated debt of households, companies and the State increased by about 27.4 billion euros for the year as a whole, according to the Bank of Portugal.
In December, the indebtedness of all economic agents (excluding banks) rose for the sixth consecutive month. Compared to November, the increase was 2.93 billion euros.
The debt ratio had been falling in recent years, but the pandemic interrupted this trajectory. The Covid-19 outbreak forced the various governments to increase public spending with measures to support companies and workers, such as layoff programmes and credit lines with public guarantees, something that was also followed by the Portuguese government.
The increase in debt was accompanied by a 7.6% drop in Portugal’s economy, which also penalised the economy’s debt-to-GDP ratio. This indicator stood at 368.8% at the end of 2020, which represents an increase of 32 percentage points compared to the ratio of 336.8% of GDP recorded at the end of 2019. Although the nominal value is the highest ever, the indebtedness has not yet reached the historical maximum of the sovereign debt crisis.