Growth of debt in the private sector is still slower than GDP growth

Taavi Raudsaar
Taavi Raudsaar
Financial Sector Policy Division of Eesti Pank

Households and businesses took on more new loans at the start of this year than they did in the previous couple of years, but their indebtedness has continued to fall as earlier loans are repaid and incomes rise. The indebtedness of the real sector measured as the ratio of debt to GDP fell to 140% by the end of the first quarter. This means that the indebtedness has fallen by 27 percentage points from its peak three years ago and has returned to its level of 2007.

The financial position of households and businesses was also improved in the first quarter by growth in deposits and cash as well as the reduction in debt. The more balanced financial position reduces their vulnerability to any potential risks from the external environment. The financial savings of households, which are their deposits and cash held in hand, grew at an annual rate that reached 8% by the end of the quarter. Although corporate deposits in banks in Estonia were at around the same level that they were at the end of last year, deposits held abroad increased by over 100 million euros during the quarter.

The Estonian economy as a whole was a net borrower in the first quarter. This means that the country as a whole took in more funds from abroad than it invested there. This was largely led by the general government, which had a budget deficit as usual in the first quarter caused by payment of tax refunds. 

Financial account statistics can be found on the Eesti Pank website.


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