According to the report of the National Bank of Serbia for the last quarter of 2022, the year-on-year growth of loans to households in December maintained its slowing trend, with 6.3 percent.
In nominal terms, the balance of loans to the population in the last month of last year amounted to 46.6 percent of all bank credit claims from the non-monetary sector and about 20.4 percent of Serbian GDP.
When these two statistics are added together, total loans to the private sector in Serbia amounted to approximately 26.5 billion euros. That is about 43.7 percent of Serbia’s GDP.
This number essentially coincides with the estimates of the World Bank (44 percent for our country) in its global report on the indebtedness of citizens and the economy in all countries. And the Bank for International Settlements (BIS) keeps its statistics at the end of each quarter, however, since not all countries submitted the latest results, in this analysis we focused on the end of last year.
How does the domestic borrowing of the private sector compare with countries in the region, but also with other developing countries, as well as with developed economies?
Looking at the debt-to-GDP ratio, the results are actually very diverse at the global level. The latest BIS statistics generally deviate from earlier World Bank estimates by +/- one percentage point, but let’s say they match enough to get a certain (correct) picture.
At first glance, citizens and businessmen in developing economies tend to be over-indebted relative to their country’s GDP.
BIS reports that at the end of 2022, the private sector in the Eurozone was indebted to 89.6 percent of GDP, in the United States about 51.2 percent of GDP, while the G20 countries had a total of 94.9 percent of GDP.
On the other hand, developing economies recorded 122.6 of their aggregate GDP in loans to the private sector.
Compared to them, the Serbian market is doing quite well, or as bankers would say “there is still room for growth”. It should be taken into account that the absolute values of lending are still much higher in developed countries. For example, the US GDP alone is above 25,000 billion dollars.
And again, there is an anomaly among developed countries – the private sector in Hong Kong is over-indebted with 273 percent of the territory’s GDP, which is especially evident in the midst of the Chinese real estate and mortgage crisis. In total, according to this criterion, China records debt of 185.4 percent of GDP, Switzerland 154.1 percent, Japan 123.9 percent, Germany 82.2 percent, Russia 53.9 percent of GDP.