ZAGREB, Jan 15 (Hina) - The Croatian National Bank's Council on Wednesday pointed to a very high increase in bank loans which it said had unfavourable effects on the payment balance and growth of foreign debts and occasionally
reinforced appreciation pressures. If it continues, this trend might endanger macroeconomic stability, this body said.
ZAGREB, Jan 15 (Hina) - The Croatian National Bank's Council on
Wednesday pointed to a very high increase in bank loans which it
said had unfavourable effects on the payment balance and growth of
foreign debts and occasionally reinforced appreciation pressures.
If it continues, this trend might endanger macroeconomic
stability, this body said. #L#
At today's session, the Council considered the latest monetary and
economic movements, as well as a quarterly report on the banking
sector.
It was pointed out gross domestic product growth indicators in the
third quarter of 2002 were favourable, up by 6.5 percent, or by five
percent in the first nine months of the year. The annual inflation
rate according to retail prices amounted to 2.3 percent.
The annual growth rate of industrial production including November
was 5.4 percent. These high levels were marked in some other sectors
as well. Unemployment that month showed a 0.6 percent decrease
compared to November 2001, while real net wages increased by about
4.4 percent.
In contrast to these favourable indicators is data on a significant
growth of the foreign trade deficit -- for the first eleven months
of the year a growth of 27.2 percent -- as well as a very high growth
of bank loans -- at the end of November 2002 loans to citizens were
40.3 percent higher while company loans grew by 21.4 percent from
November 2001.
Considering that the growth in bank loans is based on the growth of
foreign passive loans and not domestic deposits, it is evident that
funds for the increased loans for domestic sales are obtained
through foreign loans. This has a negative effect on the payment
balance and the growth of the foreign debt and occasionally leads to
major appreciation pressure. The continuation of this trend could
threaten macroeconomic stability.
According to estimates by the central bank, the annual growth in
bank loans by 16 percent is sufficient to support further economic
growth, without too much pressure on the payment balance and
foreign debt. In line with this, measures have been adopted towards
limiting loan placements.
(hina) sp/ha sb