CNB Council: Corporate and housing loans accelerate growth, consumer lending continues to decline

Published: 10/3/2021

At its session today, the CNB Council examined current economic and monetary developments as well as the report on international reserves management in 2020 and adopted several decisions on matters falling within its competence.

In the last quarter of 2020, real GDP grew by 2.7% on a quarterly basis, but at the same time, it was 7.0% lower than in the same period of the previous year. In January 2021, employment continued its growth and the number of unemployed persons continued to decline. However, these indicators are less favourable relative to January 2020 (employment is lower by 0.5% and unemployment is higher by 18.1%). The annual fall in consumer prices decreased to –0.3% in January 2021, from –0.7% in December 2020, largely as a result of the increase in the contribution of the prices of energy and industrial products. The CNB maintained its highly expansionary monetary policy so banks’ free reserves continued reaching their historical high. The annual growth of bank placements remained at the level of 3.9% in January 2021, as in the previous month. The growth of placements to non-financial corporations accelerated from 5.6% in December 2020 to 5.9% in January 2021, while placements to households slowed down from 2.1% to 1.8% as a consequence of the continued weak demand for general-purpose cash loans, which deepened the fall of such loans, while the increase in housing loans accelerated, reflecting additionally the impact of subsidies. According to the Ministry of Finance monthly data, in the last quarter of 2020, the central government balance ran a deficit, which was noticeably less favourable than in the same period of 2019. At the end of November, public debt reached 88.5% of GDP, or up by 15.9 percentage points from the end of 2019.