Global government debt has never been so high. Debt in the Netherlands also increased by 12 percent last year. Yet Sander van der Ent of asset manager Janus Henderson is not worried about this. ‘The affordability is good for us, especially compared to neighboring countries.’
Total government debt rose 7.6 percent last year to a record $66.2 trillion. “We expect it to rise to $77 trillion by 2025,” says Van der Ent. Although he also nuances that figure. “If you put it in relation to the debt ratio, which is the ratio between the debt and the gross national product (GNP), then we see that it actually improves.”
Although that does not say everything. ‘More importantly, the affordability of debts is deteriorating’, says Van der Ent. This is due to the rise in interest rates. Interest expenses increased by 20 percent worldwide. That is the fastest increase since 1984. Those burdens will have a heavier impact than in the past, because there is more debt worldwide.’
Dutch debt ratio is low
Debt also rose in the Netherlands last year, by no less than 12 percent. ‘That is a greater increase than in the countries around us,’ says Van der Ent. ‘But our debt ratio is quite low at 51 percent. As a result, affordability is good, certainly in comparison with those other countries.’ The asset manager expects the Dutch quote to fall slightly by 2025, to 48 percent.
“Debt may increase, but if growth accelerates or remains the same, then you will not really see a change in the debt ratio”
Our economy is simply in good shape, explains Van der Ent. ‘Debt can increase, but if growth accelerates or remains the same, then you don’t really see a change in the debt ratio.’
If you calculate per capita, the Dutch debt will probably rise from USD 31,000 in 2021 to USD 33,000 in 2025. ‘But again, that is manageable and below average,’ says the asset manager.
