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Expert: Latvia’s economic development is mainly ensured by entrepreneurs’ finances

Vilnis Purviņš/macroeconomics.lv
«Latvia’s economic development is currently largely secured by finances of entrepreneurs, whereas the contribution of banks in the form of loans among businesses and households grows minimally,» Bank of Latvia economist Vilnis Purviņš told makroekonomika.lv portal.

At the same time, the expert notes that monthly growth of domestic deposits continues.

The expert explains that the credit portfolio has increased for non-finance companies (0.3%) and household (0.1%) sector (housing loan increase was 0.1%, whereas consumer loan increase was 0.6%). Growth was insignificant – only 0.1%. Domestic loan annual change rate did not change significantly – reaching -4%, including loans for non-finance companies (-4.7%) and loans for households (-4.8%). If we ignore the influence of structural reforms in the banking sector, the annual loan change in all sectors remained positive – generally 1.4%. This includes 1.2% for non-finance companies and 0.8% for households, the expert says.

Indexes of newly-issued loans improved slightly in March – both for enterprises and households. With that, the general index of new loans issued in Q1 is no longer behind last year’s level, comments Bank of Latvia expert.

Purviņš notes that in March there was an increase for banks’ deposits from domestic non-finance companies and households (4.8% and 9.5% respectively). Annual deposit growth reached 7.8%.

«The lending survey performed in March showed that lending standards have become slightly stricter. On top of that, they will become even stricter soon. Demand for loans among companies has not increased, which could be associated with potential external environment risks. At the same time, demand for loans has slightly increased among households, but even in this sector banks remain cautious in regards to future growth. In spite of that, slow credit portfolio growth will likely continue,» says Purviņš.


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