Vaidas Žagūnis. The volume of new business loans in the Baltic region is at an all-time record | Business

Record statistics in Lithuania

Businesses in the Baltic region have recently been actively borrowing for investments and business development. Data from the European Central Bank (ECB) show that new business loans in 12 months the moving average in the Baltic region reached 895 million euros and was very close to the historical maximum – 901 million. euros in 2023 December. During the year, the volume of new business loans in the Baltic region increased by 12 percent. or 96 million euros.

When assessing the dynamics of new business loans in the Baltic region, Lithuania stands out positively. Here are new business loans for 12 months. the moving average, according to the ECB, reached 310 million in May. euros and was a record. In Estonia, the data of new business loans remains stable for some time, and in Latvia from 2023. the gradual growth of new business loans is recorded: 12 months the moving average of new business loans increased by 25 percent.

The growth dynamics of business loans in Lithuania and Latvia is positively correlated with the strengthening of the economic cycle. The first of 2024 In the fourth quarter, the annual GDP growth of Lithuania and Latvia reached 3 and 0.9 percent, respectively, while Estonia’s economy contracted by 2.1 percent. It was the eighth consecutive annual contraction of the Estonian economy, but it was already the slowest since 2023. of the third quarter.

Estonia’s economic cycle continues to be weighed down by relatively higher private sector debt. Eurostat data show that household loan obligations in Estonia amount to 35 percent. GDP, when in Lithuania and Latvia it is 22 and 17 percent, respectively.

The special role of retail

One of the main sectors driving the Baltic economies forward is retail trade, that is, domestic consumption. The improving dynamics in this sector is directly related to the recovering consumer expectations in the Baltic region. As for Lithuania, it can be highlighted that in May the annual growth of retail trade volumes (4.6%) was the fastest in 2 years, which is significantly influenced by the increased optimism of Lithuanian consumers and the recovered purchasing power of the population.

Data from the European Commission show that in June the opinion of Lithuanian households about financial prospects was the best since 2007. spring It seems that the recovery of the purchasing power of the Lithuanian population has reached such a level that it already encourages people to spend money more actively on consumption.

In June, the opinion of the Latvian population about financial prospects reached 2022. the initial level, which was observed immediately before the start of the Russian war in Ukraine. Signs of strengthening domestic consumption are also visible in the Estonian economy: in June, the level of optimism of Estonian retail businesses was 1.7 times higher than a year ago, and the recovery of Estonian retail trade already reaches 3.7 percent.