Euro zone lending falls for 8th month



Reuters

Published — Monday 28 January 2013

Last update 29 January 2013 12:35 am

| نسخة PDF Print News | A A

FRANKFURT: Loans to companies and households in the euro zone contracted for the eighth month running in December, showing low official borrowing costs are having little success in reviving investment and spending.
The European Central Bank has cut interest rates to a record low and pumped more than 1 trillion euros into the banking sector, which some banks are beginning to repay early in a sign that funding conditions are improving. But lending remains weak.
Loans to the private sector fell 0.7 percent from the same month a year ago, ECB data showed, in line with the mid-range forecast in a Reuters poll of economists.
"The euro zone may be heading for a recovery, but not a credit-fueled one," said Berenberg economist Christian Schulz. "Returning confidence in the banking sector may be concealed by the effects of the ongoing recession and deleveraging."
The monthly flow of loans to non-financial firms fell 22 billion euros in December after falling by 7 billion euros in November. The monthly flow of loans to households showed a drop of 3 billion euros after a rise of 6 billion euros in the previous month.
The cheap funds the ECB is pumping through the monetary system are not reaching households and businesses evenly across the currency bloc as some countries struggle to get their stricken economies back on track, though progress has been made.
On a country-by-country basis, the data showed a 22 billion euro drop in private-sector lending in Spain, the largest monthly fall since July. In Portugal, private-sector lending fell by 2.6 billion, the biggest drop in a year.
Italy, however, posted a healthy rise in private-sector loans of 12.6 billion euros to 1.757 trillion euros.
The central bank has taken some of the heat out of the euro zone crisis by announcing a new, as yet unused, bond-purchase program, but the bloc's economy remains weak and is expected to have shrunk in the final months of 2012.
ECB President Mario Draghi noted in early January some economic indicators had stabilized at low levels and financial markets' confidence had improved, which along with the ECB's accommodative policy should lead to a recovery later this year.
Draghi even spoke of "positive contagion" in financial markets, and yesterday's data pointed in that direction, showing consumers and firms' deposits in banks in Greece, Italy and to some extent Spain rising in December.
The more upbeat assessment has doused hopes of any further cuts in interest rates but most economists think the economy will contract overall this year.
"The much more positive sentiment about the euro zone future that has prevailed in financial markets so far this year will probably take some time to materialize in greater credit availability and economic growth," Oxford Economics' Marie Diron said.
Euro zone M3 money supply — a more general measure of cash in the economy — slowed to annual growth of 3.3 percent in December from 3.8 percent in November, just below the consensus of 3.9 percent from analysts polled by Reuters.

What's happening around Saudi Arabia

JEDDAH: A small fire broke out on the roof of the Grand Mosque on Monday morning, causing minor injuries to five people, including members of the Civil Defense, one security officer and three workers. The fire broke out at about 2 a.m. and covered an...
JEDDAH: The director general of the Saudi Industrial Property Authority, Saleh Rasheed, has said that Sadeer Industrial City, which is regarded as one of the largest industrial cities in the Kingdom, possesses great capabilities that sets it apart as...
DAMMAM: Cheap and out of date cosmetics are causing serious health problems in the Kingdom, including skin diseases, hair loss and cancer, local doctors say.These products are often manufactured incorrectly or contain harmful fats, the doctors were q...
JEDDAH: Several young Saudis have started filming Jeddah’s historic district using cameras mounted on drones to gather professional 3D footage that can be used to build models and create virtual tours.Bandar Al-Mutlaq, owner of the Arab Foundation, w...
RIYADH: The Saudi capital is fully geared for this year’s Eid Al-Fitr celebrations that include an exciting bouquet of entertainment, heritage, sports, artistic and theatrical events.The annual Muslim festivities being organized here by the Riyadh mu...
JEDDAH: As part of its growing supervisory and investigative status, Riyadh Health Department’s forensics center examined 632 cases over the past eight months involving suspected murder, rape and abuse of women and children.Khaled bin Muhammad Hassan...
RIYADH: The Syrian Expatriates Medical Association (SEMA) expressed its thanks on Monday to Saudi organizations and individuals for donating to the campaign to help Syrians affected by the ongoing conflict.SEMA has 1,300 members in Syria and other co...
RIYADH: Inclusion of the Hail rock art in the UNESCO World Heritage List is proof of the Kingdom’s status and cultural profoundness, said the Saudi Commission for Tourism and National Heritage (SCTNH) on Monday.Reacting to the announcement of the fou...
JEDDAH: The Yemeni community has asked the Saudi government to extend the rectification process, which ends Tuesday, claiming that there are many thousands still seeking to get proper identification documents to qualify for work visas in the Kingdom....
JEDDAH: The Ministry of Municipal and Rural Affairs has set up 343 electoral constituencies for the Dec. 12 municipal council elections.This was done on the orders of Abdullatif Al-Sheikh, the minister and head of the General Committee for the Munici...
JEDDAH: Efforts are under way to electronically handle all Haj-related works to achieve speed and accuracy, as well as reduce costs an bring in transparency, Haj Minister Bandar Al-Hajjar has said.Speaking at a workshop in Jeddah on Sunday, Hajjar sa...
JEDDAH: The Board of Trustees of the King Abdullah International Foundation for Charity and Humanitarian Works on Sunday held its third meeting in Jeddah in the presence of Prince Khaled bin Abdullah, the board chairman, and Prince Miteb bin Abdullah...
RIYADH: The Ministry of Health has announced that six people were infected with the Middle East Respiratory Syndrome Coronavirus (MERS-CoV) in the period from June 28 to July 6.The ministry has now recorded 1,045 cases of MERS since June 2012, with 5...
ALKHOBAR: Patient visitations play an important role in the healing process, provided the well-wishers adopt the right approach by speaking and acting in a manner that the sick person’s morale is lifted. However, any wrong move by the visitor may aff...
MAKKAH: The price of residential land has registered a drastic 30 percent drop due to the slump in the market over the past six months, said an online newspaper.According to real estate dealers, the reason behind the decision was the imposition of 30...

Stay Connected

Facebook