JULY 23 2012 20:41h
The deterioration of macroeconomic conditions will lead to an increase of indebted Croatian households finding themselves in debt hardship, the Croatian National Bank (HNB) says in the latest edition of its publication "Financial Stability".
According to an HNB analysis, nearly 14 percent of all indebted households were vulnerable in 2011, with their debt accounting for 12 percent of the total debt of the population.
A rise in the financial vulnerability of households and in credit risk exposure of commercial banks ensued with the depreciation of the domestic currency the kuna against the Swiss franc. The deterioration on the labour market had a minor effect in this segment.
The share of vulnerable indebted households intensively rose in 2009, this rise was milder in 2010 and the number of potentially vulnerable households and the rise in their share in the debt continued to increase but at a slower pace in 2011. In the period from 2008 through 2010, 8.8 percent of indebted households were treated as financially vulnerable on the average.
The households' borrowing in late 2011 and in early 2012 continued to stagnate in the circumstances of a deepening economic recession.
The annual rise in households' debt was 2.6 percent at the end of Q1 2012, with the households' total debt oscillating at about 40 percent of GDP for nearly two years, the HNB says.
The amounts of newly approved loans to households also indicate the continuation of stagnation in households' borrowing.
The weak demand of households for new loans reflects unfavourable trends on the labour market with an intensified reduction of employment and lower wages. (Hina)