Lower demand for loans
17/10/2015 13:25
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The request of businesses for funding from banks dropped for the third
trimester. A recent observation of the Bank of Albania showed that
businesses kept reducing their demand for loans in the third trimester
of the year, a raising tendency since the beginning of the year.
According to the Central Bank, the biggest drop has been noted in big businesses, especially with the loan that is taken for investments. The demand from smaller businesses has increased, together with the demand of individuals.
Official data show that by the end of August, the total loan stock that banks have issued for business dropped to 359.2 billion ALL from 372.8 billion that it was one year ago. The strong shrinking not only removes bad loans, but it also portrays the weak demand of businesses, which creates an additional problem to the economy.
In the first part of the year, the entire growth of the national production came from new investments, while consumption gave a negative effect, since families reduced their spending for the third consequent trimester.
Now that the loan demand has dropped, INSTAT says most of the investments are funded with business funds or funds from public funds, although some critics have reserves on this.
But beside this debate, the business and budget internal funds are two sources that cannot guarantee a stable investment recovery. This means that if business will keep staying away from banks, the economy might lose the only motor that is keeping production on a positive terrain.
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