Wednesday, 31 October 2012

General Public's Borrowing Spree in Norway Continued in September

Gross Domestic Debt in Norway held by the general public increased 6.3% YoY in September to NOK 4,034 billion data released today by Statistics Norway shows. Since 1988 the average YoY growth rate was 7.0%, but since 2005 this has jumped to 9.7%. On a YoY basis, debt has now increased every single month since March 1994, that is 223 months in a row! The current debt held by the general public is now 35.2% higher than it was at the beginning of 2008, before the financial crisis of 2008 set in.

Household Gross Domestic Debt increased 4.9% compared to September last year.

Borrowing spree indeed and Norges Bank (Norway's central bank) is playing a very dangerous game keeping the key policy rate today unchanged at 1.5%. Credit expansion and low interest rates (and low savings) is how financial bubbles are created. One becoming increasingly evident in Norway now is the housing bubble. And yet another extremely loose budget (see budget 2013) will only make matters worse for the longer term. One day the general public borrowing and government spending spree will have to come to an end. It could get ugly.

 
Data from 1987 onwards

 
 
Data from 2005 onwards


 

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