STATEC’s latest economic report underscores that demand for credit continues to languish.
The economic landscape presents a mixed picture, with contrasting trends observed across different sectors. On one hand, companies have requested less credit in the first quarter, a trend expected to persist into the second quarter as the economy slows. Notably, new loans extended to businesses have declined significantly, plummeting by 42% year-on-year in Luxembourg. This decline is attributed to diminishing investment activities and the prevailing high interest rate environment, as outlined by STATEC.
Conversely, demand for consumer credit and mortgages among individuals remains subdued, although signs of a gradual recovery are emerging. While consumer credit demand is anticipated to increase in the wider eurozone, the same cannot be said for Luxembourg, where consumer credit has experienced a notable 9% decline despite the fact that the recovery is already underway in Europe.
Despite this cautious consumer sentiment, banks have noted a resurgence in demand for mortgages, for which rates are still high in Luxembourg. Over the last three months, new mortgages have indeed risen (+15%) but they “remain lower than last year.” Additionally, this increase is primarily driven by debt restructuring efforts, with outstanding amounts continuing to fall (-0.6% over one quarter, -1.3% over one year). This is a sign that the crisis is not over for Luxembourg residents, whose purchasing plans have been put on hold.
Looking ahead, banks anticipate a potential surge in interest from individuals in the coming weeks, projecting growth in demand for credit in both Luxembourg and the eurozone during the second quarter.
Related
Defying market uncertainties: Spuerkeess announces record net profit for 2023
