Lending to the economy falls

As a result, loans for the economy have fallen from 552.6 billion in July last year to 547.8 billion this year. This is the first time since the establishment of the private banking system, that the economy faces an annual decline of loans.

The contraction is 0.8 percent and the detailed data show that it’s all happened because of business loans. According to the Bank of Albania, at the end of July, Albanian businesses had a total of about $ 100 million less in bank loans than a year ago.

This is a figure that shows that the private sector of the economy is in contraction phase. The last ten years, loans to the economy have been the determining factor for the financing of new investment and economic growth. According to the Bank of Albania study, its effect on the growth of national output has been 1-5 in 2 additional percentage points per year. But its effect has already turned out negative. Last year loan cramp was the main cause for bringing the economic growth down to the 15-year minimum of 1.6 percent. This year, the crisis is even stronger. A day earlier, the World Bank director for the region said that the revival of loans is one of the main conditions of the Albanian economy recovery from the agony of low growth. But with bad loans to 25 percent and tepid consumer demand that deters business investments it seems almost a challenge to the limits of the impossible.

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