Loans to Hungarian households started the year with an increase, ending a three-year downward trend, central bank data showed on February 27.
The data will be taken as a positive sign for the government, which introduced a number of measures in the past few years to help borrowers, many of whom had been struggling to pay off foreign currency denominated loans. Meanwhile, tough treatment for the banks has seen them pulling their heads in, leaving the central bank as the main driver of domestic credit.
Household loans increased by 1.7% on the year to stand at HUF7.11tn (€24bn) as of end-January, registering their first rise since November 2011. Mortgage lending expanded 3.5% y/y to HUF3.53tn, after staying broadly unchanged in the previous month. Consumer credits, on the other hand, edged down 0.6% to HUF3.32tn. Yet, the decline softened from 4.3% y/y in December.
At the same time, corporate loans registered a 0.2% y/y decline, a slight retreat from December’s 1.1% hike - the first in 13 months. Credit to the government shrank 25.3% y/y to HUF595.9bn in January, after a 28% contraction in December.
Bank lending has been struggling over the past few years, as the Orban government has pushed lenders into losses, while the erratic policymaking has meant the banks have been wary of new lending. That issue has been becoming more urgent, with low lending to the economy seen likely to stem economic growth.
While Hungary outperformed in 2014, ending the year with GDP expansion of 3.5%, analysts point out that the state is largely alone in driving both lending and investment. That has many expecting growth to slow to 2.1%-2.5% this year.
In a bid to boost lending, Hungary’s central bank said earlier in February that it will expand its cheap loans programme as it seeks to push economic growth to as much as 3.5% in 2015. In addition, the government has pledged to lower the high tax burden on lenders and improve the business climate in the sector in exchange for increased lending.
Finland has issued a second and final permit for the construction of the controversial Nord Stream II pipeline that is to pump gas from Russia directly to Germany via a Baltic Sea route, the Regional ... more
Three large German companies have chosen to invest in Debrecen, Hungary's second-largest city, since Lufthansa launched its first direct flight two years ago, it was announced on April 11. ... ... more
Green opposition party Politics Can Be Different (LMP) has suspended talks with fellow opposition parties after they failed to reach a cooperation agreement ahead of the April general election. ... more