Macro roundup: Bank lending ticks up
Greek consumer credit grows for first time in 12 years, though net flows are small
After its steep drop off last year, the growth rate of Greek bank lending to the private sector has picked up slightly in the last couple of months.
Overall bank lending to the private sector grew an annual 1.6 percent in March, up from 1.4 percent the month before and 0.9 percent in January. Credit to non-financial corporations rose 3.4 percent in March, while household lending fell 2.1 percent.
The contraction in household lending was due to the steady drop in mortgage lending, which has been shrinking at a steady annual rate of 2.5-3.5 percent for over a decade. In March, it contracted 2.9 percent.
What’s interesting in the data was that the 0.4 percent of consumer credit growth in March was the first annual expansion since 2010. However, the aggregate sums in this category are small. Net new consumer lending in the 12 months covered amounted to just 57 million euros, compared with 2.25 billion euros to non-financial corporations and a net reduction of 1.29 billion in mortgage lending.
Unfortunately, the dataset released by the Bank of Greece has become more limited from 2022 onwards, giving us fewer details to look at. We no longer have a breakdown of lending to small- and medium-sized enterprises, nor a breakdown by economic sector. This is data we’ve delved into fruitfully before, so hopefully the central bank will provide it again soon.
There was no macro roundup last week since it fell on Orthodox Good Friday, so we didn’t cover February’s balance of payments data, which showed that the current account deficit for the month almost trebled from a year earlier to 2.12 billion euros.
Import growth of 64.6 percent was only to a limited extent due to inflation, with constant-price import growth at 37.5 percent. By contrast, exports grew 26.3 percent in February, but by only 4.3 percent at constant prices.
Household and business deposits dropped by 989 million euros to 176.6 billion euro in March. After a run-up during the pandemic, they’ve now fallen for three straight months for the first time since the bank run in 2015.
Retail sales increased 16.8 percent in February from a year earlier, compared with a rise of 13.5 percent in January. Volume rose 10.8 percent.
Greece’s producer price index increased an annual 46.2 percent in March, an upswing from 33.6 percent the month before. The energy component of this jumped 86.1 percent, with the next-biggest riser being intermediate goods, which increased 14.2 percent.
Building activity in January, as measured by the number of permits issued, increased 4.3 percent from a year earlier. Surface area increased 24.4 percent, while volume rose 23.6 percent.
The central government ran a primary budget deficit of 1.65 billion euros in the first three months of the year, compared with a deficit of 3.41 billion euros in the same period 2021 and a budget forecast of 1.33 billion euros.
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Next week’s key releases
Monday, May 2:
April economic sentiment (European Commission)
Tuesday, May 3:
April purchasing managers’ index (IHS Markit)
Friday, May 6:
March commercial transactions (Elstat)
Elsewhere on the web
It took me a while to get around to reading this argument by JW Mason against the Fed raising interest rates to control inflation. Now that I have, I heartily recommend it. Despite the US focus, most of the arguments can be extended to the eurozone and the ECB.
Maria Demertzis on the end of the 60-year period in which Europe has enjoyed a peace dividend.
UBS is one bank that’s still retaining a positive outlook on the Greek economy.
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