The measures taken by the government to prop up an economy battered by the coronavirus pandemic have increased liquidity, a fact reflected in higher loans to businesses and a significant expansion in business savings.
Households are also saving more – from an admittedly lower base – as they attempt to weather the crisis. They are borrowing less too, especially for housing.
According to Bank of Greece data, credit growth to businesses rose 5.8% in July, from 3.7% in June; over the same period corporate deposits rose a whopping 24.8%, from 19.1% in June.
In actual numbers, corporate deposits were €31.8 billion at the end of July, from €29.2 billion in June. This was the result of the increase in loans, some guaranteed by the government and some by the Hellenic Development Bank.
The net financing flow – that is the new loans provided to businesses minus the repayments of old loans – rose to €1.4 billion in July from €359 million in June. Total business loans at the end of July stood at €73.5 billion.
Some sectors were more generously financed: Credit growth in industry rose 8.8% in July, up from 6.6% in June; in commerce, it was up 7.7% in July from 2.9% in June. There was also significant credit growth to tourism (6.9% from 1.9%) and transport businesses (14.6% from 3.5%). By contrast, the growth in credit to construction was negative in both June and July (-4% and -3.7%, respectively).
Experts say the fear of a second Covid spike is leading businesses to save a significant part of the capital provided to them by the loans and other instruments, such as the reduction of, or exoneration from, pre-paid tax on 2020 income.
As for households, total deposits rose 6% in July, to €119.7 billion. Money kept in savings accounts rose by €579 million to €61.8 billion, while time deposits dropped €421 million to €40 billion, reflecting the need felt by households to have liquidity at hand to weather the difficult times, especially now that long-term savings are not rewarded by high interest rates.