Lending to recover. Interest rates to go down
Lending has been recovering gradually, albeit slowly, because of the fragile recovery of disposable income, while interest rates on loans and deposits will go down, according to UniCredit's report on household wealth in Central and Eastern Europe (CEE) and an analysis of the Ministry of Finance on the Bulgarian economy until April 2011.
The gradual improvement of labour market conditions and a more stable growth of incomes led to greater demand for loans, reported the bank. The volume of lending, however, should remain below its pre- crisis levels, said Gianni Franco Papa, Director of UniCredit's CEE Banking division. According to him, the demand for mortgage loans will continue to exceed the interest expressed in consumer crediting. Non-performing loans (NPL) of households have already reached their maximum levels in countries like Turkey and Estonia, while the NPL ratios of the rest of the region are expected to peak between the first half of 2011 and the end of the year, depending on the financial circumstances in different countries, explained Papa. Domestic NPLs levels continue to increase but at a slower pace and the upward trend is expected to reverse itself in the second half of the year, forecast the International Monetary Fund (IMF). IMF experts reckoned that Bulgarian inflation will exceed 4% this year because of high food and fuel prices. We remind our readers that the GERB (Citizens for European Development of Bulgaria) government's estimates were for inflation of 3.9%. The analysis of the Bulgarian economy until April 2011, drawn up by the Ministry of Finance, indicated that expectations for the development of inflation remained relatively high, while the increase in domestic prices will entail a contraction in consumption. Interest rates on deposits and loans will go down and the trend will persist in the second quarter of the year.
Internet source: klassa.bg
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