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Businesses and individuals have started again to delay the payments of loan installments they have received from banks.
The data of the Bank of Albania revealed that the indicator of non-performing loans to the total loans granted in the economy reached 5.23% in May.
Although it continues to remain near the historical minimum, the trend is increasing for the second month in a row.
May marked the highest level since July 2022, in a signal that rising interest rates, a slowing economy and high inflation are taking their toll on the ability of businesses and individuals and households to pay back loans they have taken from banks. .
In the first quarter of the year, INSTAT announced that the Gross Domestic Product (GDP) is estimated to increase by 2.72%, compared to the first quarter of 2022.
This is the lowest growth rate since the third quarter of 2020, when the country was suffering the consequences of the pandemic. Some of the sectors that are among the main borrowers recorded minimal growth.
The activity of industry, energy and water had an increase of 1.23%. Construction activity had an increase of 4.54%. The group of trade, transport, accommodation and food service activities had an increase of 3.52%.
On the other hand, loan interests have been continuously increasing until March, as a result of the tightening monetary policy followed by the Bank of Albania, which has increased the base rate several times since March 2022, leading to 3% currently from 0.5% that was over a year ago. This trend was reflected in the increase in the cost of loan interests and, therefore, the monthly installments paid by businesses and individuals.
However, the apparent downward correction of treasury bond yields in the first half of this year had a positive effect. Given that loans in lek are quoted mostly based on the performance of yields, their decline has created a breather for borrowers this year, after the rapid growth of the second half of last year.
Meanwhile, in May inflation returned to a slight upward trend, after six months when it had only shown a slowing trend.
In May, according to INSTAT, the annual change in the consumer price index was 4.7%, from 4.6% the previous month, while in October it reached the highest level since 1998 of 8.3%.
The upward trend of inflation seems more influenced by internal factors, as in the Eurozone prices are decreasing at a faster rate than in Albania, as a result of the easing of energy costs. Rising prices reduce the solvency of individuals who have less money available to pay loan installments. / Monitor
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