Household and business debts are set to drop to their lowest levels in years relative to the gross domestic product (GDP) by the end of 2024.
The actual amount of household debt has not decreased, but the debt ratio has declined because GDP growth has outpaced the rise of outstanding mortgages and other loans, according to a financial stability report from the National Bank, as reported by De Tijd on Saturday.
Since the peak of 66% at the start of 2021, debts relative to GDP have fallen to 57% by the end of 2024—the lowest point since the third quarter of 2014. This reduction is largely due to significant interest rate hikes since 2022, which have discouraged borrowing, coupled with high inflation and automatic salary indexing that have significantly boosted the nominal GDP. Household debts primarily consist of mortgage loans.
The National Bank also notes a reduction in the debt ratio for non-financial businesses. However, government debt has increased. In 2024, government debt almost reached 105% percent of GDP and is projected to continue rising without changes in policy.
