Corporate debt shrank in 2017 and that of households increased



  • Corporate debt liabilities shrank as investment in fixed assets is low and companies can finance investments from their own funds
  • Domestic borrowing by Estonian companies increased while their borrowing from abroad decreased
  • Households are borrowing enthusiastically both to buy real estate and for consumption
  • Around one billion euros more was invested abroad in 2017 than was taken in from there

Corporate debt was down by around 1% in 2017. Debt liabilities shrank as investment in fixed assets is low despite increasing recently and companies can finance their investments and purchase assets using their own funds. Furthermore, companies have reduced the amount of short-term debt liabilities taken from foreign associated enterprises. Borrowing is still mainly from banks operating in Estonia, which reflects the relatively good access to bank loans in the country.

Households are buying a lot of housing and cars, and so their debt liabilities increased by 7% in the past year. Although the risks from credit growth have increased, they are softened by the growth in debt liabilities not exceeding that in savings or incomes. Banks became more active in the consumption loan market and the growth in the stock of loans and leases issued by them accelerated in 2017. The previously very strong growth in loans from other lenders, including instant loan providers, slowed.

The indebtedness of companies and households in the Estonian private sector, or the debt-to-GDP ratio, declined notably in 2017 to 116% at the end of the year. The decline was due to the fall in corporate debt and the rapid growth in nominal GDP. The debt burden of the Estonian private sector could have been considered excessive ten years ago and after the economic crisis, but its current level is much more in keeping with the core indicators, especially income levels. The indebtedness of the Estonian general government, which is still the smallest of any country in the European Union, declined a little last year and was 9.5% of GDP at the end of the year.

The Estonian economy was again a net lender to the rest of the world last year and the net outflow of financial assets grew by one billion euros to over 4% of GDP. Since 2009, Estonian residents have put more financial assets abroad than they have taken in from abroad. The difference with the past decade is primarily that Estonian households are saving more now and companies are investing less. The position as a net lender has meant the figures for the external debt and the international investment position have improved, but low investment also restricts the future capacity for growth of the economy.

For more details see the infographic.

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Additional information:
Hanna Jürgenson
Eesti Pank
Public Relations Office
Tel: 668 0959
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