This graph follows from a discussion to an earlier post on whether the Irish recession can be classified as a “demand-side recession”. The graph is a replication of a slide in this presentation on the “balance sheet recession” that the Japanese economy experienced in the 1990s.
Here we use the data in the Institutional Sector Non-Financial Accounts to give the net lending/borrowing positions of different elements of the Irish economy since 2002.
The changes are fairly evident. The government has gone from a surplus to a huge deficit. The household sector has gone from borrowing 10% of GDP per annum to saving 5% of GDP per annum. The changes in the other sectors are not noteworthy.Tweet