ECONOMY

Household lending growth weakens

The growth of Greek household borrowing weakened further in August, slowing to 0.6 percent in annual terms as the economic downturn dampened demand for credit, the country’s central bank said yesterday. The Bank of Greece said the pace of loan growth to households had decelerated from 1.1 percent in July and 3.1 percent in December. The recession, coupled with tighter credit conditions, is eating into the borrowing that fueled rapid consumption and economic expansion in Greece in previous years. The Bank of Greece said household loan balances stood at 119.36 billion euros in August – about 50.5 percent of gross domestic product. It said home loans grew 1.5 percent, slowing from a 1.9 percent annual increase in July, while consumer credit continued to contract by 1.5 percent after shrinking 1.1 percent in the previous month. The Bank of Greece said the growth of credit to businesses also slowed to 2.3 percent in August from 3.4 percent in July. Meanwhile, data from the European Central Bank showed yesterday that lending to eurozone firms and households accelerated in August to the fastest rate in more than a year, a sign that the credit cycle is regaining its footing. Loans to the private sector were 1.2 percent higher in August than a year earlier, the fifth rise in a row and the fastest growth since June of last year. Loans to companies rose month-on-month but remained negative over the year, down 1.1 percent, while household lending accelerated. Analysts said they see steps toward the normalization of the credit market but added that strong fluctuations remain, making trends difficult to spot.