14.04.2022

MF: PEOPLE WILL CONTINUE TO INVEST THEIR MONEY IN REAL ESTATE

Demand for credit in 2022 will slow down compared to 2021, in line with the expected deterioration of the economic situation and increased uncertainty due to the conflict in Ukraine.

This is recorded in the draft medium-term budget forecast for the period 2023-2025. At the beginning of 2022, credit to the private sector continued to accelerate and at the end of February its annual growth reached 9.7%, accelerating all major components. Rising international prices of energy goods, raw materials and food and their impact on inflation and inflation expectations continued to stimulate demand for credit.

For non-financial corporations, loans accelerated to 6.6% with a major contribution from overdraft loans. This may be associated with a greater need for working capital for timely replenishment of stocks given the upward dynamics of prices. The strong rise in property prices, which accelerated to 9.4% on an annual basis in the last quarter of 2021, record low mortgage rates and strongly negative real interest rates on deposits led to an increase in the growth rate of housing loans to 18.1% at the end of February, the forecast said.

Factors that will act in the direction of slowing down the growth of credit to households will be the expected slowdown in the growth of consumption and compensation of employees in 2022. of the countercyclical capital buffer, in October 2022 and early 2023.

Despite the projected slowdown in housing loans, in 2022 their growth rate will remain relatively high, as buying a home is the main alternative form of investment or to preserve value in an environment of high inflation and low interest rates, according to the Ministry of Finance. Until the end of the forecast period, the growth of credit to households is expected to continue to slow down.

It will remain at relatively high levels in line with the projected development of employee compensation. At the end of 2023, the growth of receivables from households is projected to be 8.9%, and at the end of 2025 - 7.7%.

It is envisaged that in the period 2023 - 2025 the credit for the business will be gradually accelerated in line with the expected recovery of private investments, supported by the National Recovery and Sustainability Plan.

The growth of total receivables from enterprises is expected to be 5% at the end of 2023. In 2024, the total annual increase in receivables from enterprises will be 5.3%, and at the end of 2025 - 5.7%. Total receivables from the private sector will increase by 6.6% in 2023, and by the end of 2025 their growth rate will slow slightly to 6.5%.