Portugals total debt drops to 363.3% of GDP

Portugal’s total debt, meaning that of citizens, companies and the State, increased by €16.9Bn in 2021 to €768.1Bn.

However, the burden on Portugal’s economy fell to 363.3% of GDP according to the latest figures from the Bank of Portugal released on Tuesday. Moreover, because the economy grew more than its indebtedness, the ratio of debt fell to 375.4% of GDP in 2020 to 363.3% of GDP in 2021.
“The increase in GDP registered in 2021 – greater than the growth in debt – gave rise to an evolution in the debt indicators from the non-financial sector in percentage of GDP, countering those seen in nominal values”, states the Portuguese central bank, noting “in 2021, non-financial sector debt fell from 375.4% to 363.3% of GDP.
There was also a reduction in public sector debt from 170.6% to 162.8% of GDP and a decrease in private sector debt from 204.8% to 200.5% of GDP.
Despite this reduction in the ratio of debt, Portugal’s debt continues to be above the pre-pandemic amount. At the end of 2019, before the arrival of Covid-19, the debt ratio was 338% of GDP.
An additional reduction of over 20 percentage points would be required for Portugal to go back to 2019 values. However, one thing is for sure, the ratio is still far from the 420% seen during the last crisis.
After having shot up quickly during the pandemic, the nominal value of the non-financial sector debt slowed in 2021. Nevertheless, the debt it did grow in real terms by €16.9Bn in 2021 to a total of €768.1Bn, an historic maximum, most of this from the private sector.