Eurozone’s loan growth picks up pace in December

By AFP

FRANKFURT • Lending to the private sector in the eurozone picked up pace in December, official data showed yesterday, suggesting little effect from the withdrawal of a key pillar of central bank stimulus last month.

Borrowing among eurozone firms and households grew 3.4% year-onyear in December, European Central Bank (ECB) figures showed after adjusting for some purely financial transactions.

The pace of growth added 0.1 percentage point compared to November.

Looking in more detail at the data, loans to both households and nonfinancial firms grew as quickly in December as the previous month at 3.3% and 4% respectively.

But growth in credit to insurance companies and pension funds jumped more than 10 percentage points to 18.4%.

The figures suggested little impact on the real economy last month as the ECB finally wound down mass purchases of government and corporate bonds, known as “quantitative easing”.

Over more than three years the Frankfurt institution bought more than €2.6 trillion (RM12.34 trillion) of government and corporate bonds, aiming to pump cash through the financial system to stoke growth and inflation.

Looking ahead, indicators and forecasts point to economic expansion in the 19-nation eurozone falling back further from the boom year of 2017.

The International Monetary Fund last week predicted growth of 1.6% this year, compared to 1.8% in 2018 and 2.3% in the previous year.