Banks forwarded €500 million less to Portugal’s corporate sector this January compared to last, according to figures released today by the Bank of Portugal, an 11% fall.
Compared with December 2013, the reduction was 13.5% in January 2014 so either companies do not need finance or the banks are not lending to them, due mainly to a rise in mortgage debt.
Worryingly for the house-owning public, bad debts for mortgages rose to a new record high and the amount of new loans 2.5 % to €499 million (compared with €512 million a year earlier.) Compared to December 2013 the decline was 27%.
With regard to domestic bad debts, in the first month of 2014 these increased, having gone down last December, reaching a new record high of €2,428 million.
In global terms unpaid debts from individuals rose to €5,137 million, up marginally from €5,101 million in December 2013.
Total bank loans to Portugal’s households amounted to €127,589 million in January, of which €105,426 million related to loans for home purchase.
In the confirmed national accounts for Q4. 2013 the Portuguese economy recorded its first positive annual growth since the end of 2010 with a GDP growth of 1.7%. This result coincided with the first positive contribution of domestic demand up marginally by 0.1%.
With this unexpected help from domestic demand the economy also benefited from an acceleration in exports to achieve a positive outcome in the fourth quarter last year.
The concerns expressed by some economists and by the International Monetary Fund, that Portugal’s economy might return to growth based on excessive domestic consumption, seem to be confirmed by the fact that the return to growth coincided with the first positive change in private consumption, in particular the consumption of durable goods such as vehicles.
All this talk of export growth is down to one new Galp oil refinery, and the IMF has spotted this over-reliance on one corporate success.
