In the year ending in the first quarter of 2025, the Portuguese economy financed the external sector by 2.6% of GDP, according to a statement released today by the Bank of Portugal (BdP) regarding interconnections between sectors in financial national accounts, representing a reduction from 3.3% reported last year.
Households, the financial sector, and public administrations registered a financing capacity of 4.4%, 1.4%, and 0.9% of GDP, respectively, while non-financial companies “were the only resident sector with a financing need (4.1%).”
Households, which had the largest financing capacity and financed all other sectors—especially the financial sector—recorded the second-highest balance since the third quarter of 2021, according to the BdP.
In net terms, household financing of the financial sector represented 2.2% of GDP, largely influenced by the increase in deposits, “partially offset by the increase in loans obtained, particularly for housing purposes.”
The financial sector, in net terms, financed the rest of the world and non-financial companies. Net financing for the rest of the world accounted for 4.5% of GDP, “reflecting the purchase of debt securities issued externally, partially compensated by an increase in non-residents’ deposits in resident banks.”
Public administrations, in net terms, only financed the financial sector, equivalent to 1.3% of GDP. This flow primarily resulted from the reduction of public debt securities in banks, an increase in bank deposits, and a decrease in loans obtained by public administrations.
Interest in savings certificates further contributed to increasing the percentage of net financing by households with public administrations (0.1%).
The rest of the world was financed by non-financial companies by 2.4% of GDP, with BdP highlighting “the investment of non-residents in shares and other participations of non-financial companies, as well as in debt securities issued by these companies.”
The BdP also analyzed the evolution of households’ net financial assets, which at the end of March represented 200.1% of GDP, “being almost three times their liabilities.”
The central bank added that households’ financial assets have grown consecutively every quarter since the last of 2023, reaching a record high of 577.4 billion euros.
Nevertheless, despite the nominal growth, the variation has been less than the economic growth, decreasing by 1.4 percentage points compared to the previous quarter.
