Bank lending to the private sector in Romania dropped by 26 pc in 2016, UHY study shows

Bank lending to the Romanian private sector were 26 percent lower than it was before the financial crisis, hampering the return to economic growth, reveals a new study by UHY, the international accounting and consultancy network.

Last year, a total of USD 50 billion was lent to the companies in Romania, down from USD 70 billion in 2008.

By contrast, on average across all the 24 countries studied around the world, private sector bank lending increased by 24 percent over the same period in absolute terms.
UHY study points out that the bank lending to companies increased in the run-up to Romania’s accession to the EU in 2006, but continued to decline due to the lack of confidence of the banking and business sectors in the economy on long-term. Moreover, many expectations of economic growth assumed before EU accession have not been met.

UHY says that countries like Spain and Ireland which were hardest hit by the banking crisis are seeing the slowest recovery in private sector credit.

Bank lending to the private sector in Ireland is 69 percent below 2008 levels (USD 148 billion in 2016, down from USD 475 billion), while in Spain, it is 51 percent lower (USD 1.3 trillion down from USD 2.7 trillion).

Even in Germany, widely seen as the economic powerhouse of Europe, there was a 21 percent decrease, falling to USD 2.6 trillion last year from USD 3.3 trillion in 2008, and the UK is also down by 20.3 percent.

UHY says that small businesses continue to be worst affected by the ongoing bank lending slump.

UHY adds that the G7 group of leading world economies is also lagging behind – while BRICs economies power ahead. On average, the G7 saw a 1 percent decrease in real terms over the period, whereas BRICs (Brazil, Russia, India, China) enjoyed an average increase of 209 percent.

China topped the UHY table, with bank lending to the private sector jumping 270 percent between 2008 and 2016.

Bank lendingbanking crisiscompanies in RomaniaG7private sector creditRomania's accession to the EURomanian private sectorsmall businessesUHY
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