Spanish Corporate And Household Debt Falls To 155.7% Of GDP

spanish gdp slows more than expectedThe upturn in the Spanish economy and the recovery in consumption over the course of 2021 should be accompanied by a gradual recovery in the prices of goods and services

According to the Financial Accounts of the Spanish economy for the second quarter released by the Bank of Spain, company and household debt fell in this period to 155.7% of GDP, more tan eight points below the level of the previous year.

The ratio of company debt in Q2 was 94.9% of GDP, and that of families 60.8%. In the case of company debt, the rate falls to 76.3% if inter-company loans are excluded. In both cases, the levels are already close to the European average.

In the last four quarters the net financial operations of the resident sectors (households, companies, financial institutions and public administrations) have registered a surplus of 21 billion euros, equivalent to 1.8% of GDP. In 2017 the positive balance was above 2.1% of GDP.

The elevated level of foreign debt is a significant vulnerability of the the Spanish economy. In the last year until the second quarter companies, households and financial institutions have carried through adjustments to have a financing surplus of 4.4% of GDP. More than half has been carried out by financial institutions, making the sanitising of their balances compatible with necessary financing in the best of posible conditions for the other economic agents, which explains the strong growth in the Spanish economy. The financing deficit of public administrations in the same period was 2.7% of GDP.

 

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The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.