Citizens lend loans more cautiously and spend less on a daily basis, which puts both lenders and the budget treasury into trouble.
The citizens of Serbia also took seriously inflation, which had exceeded 16 percent per year, and they tightened their aspirations for loans, but also daily spending is shown by data from banks and official retail statistics.
The National Bank of Serbia Recently published the results of the Survey on credit activity, in which Serbian bankers admitted that the demand for loans from citizens decreased considerably in the first quarter of this year. They especially felt it in the housing loan sector, where prices that had been built for years now “hit the wall” of high inflation and uncertainty among buyers.
But the problem is not only with mortgage loans, less is bought in general of anything with even higher prices, so the demand for more expensive bank loans and durable consumer goods is reduced.
Bankers are in a problem because, on the one hand, they ended last year in self-protection mode, when they tightened lending due to heated inflation and increased uncertainty due to a possible recession.
In the first quarter of this year, banks continued to tighten conditions for the population, but to a lesser extent than in the fourth quarter of 2022 (year). The tightening applied to dinar loans to a somewhat greater extent than to foreign currency indexed loans – the NBS Report says.
Stricter lending conditions apply to dinar cash loans (including refinancing loans) and foreign currency indexed housing loans and consumer loans. The tightening of credit conditions for the population is also expected during the second quarter of 2023.
Now the situation has been compounded by the fact that even those who could get a loan are less willing to take it. And banks must not “sit” on money, it has to circulate in order for the banking sector to survive in general. The past months in the USA have seen the fate of banks that do not circulate money.
Consumers are delaying purchases whenever they can
According to the data of the Republic Institute of Statistics, the turnover of goods in retail trade in the Republic of Serbia in March 2023 is 5.3 percent higher than it was in March 2022. However, this is only when viewed in current, i.e., current prices. When prices inflated by inflation are excluded from the calculation, in the so-called at constant prices, turnover is lower by no less than nine percent.
The situation was only slightly better in the first quarter, when in constant prices the turnover was lower by 4.1 percent.
At the same time, there is a clear increase compared to the previous month, when turnover in constant prices is lower by 3.8 percent than it was in February 2022, and for the first two months of 2023 it is lower by only 1.1 percent.
And when citizens spend less, there is less excise tax and VAT, and thus the income of the state coffers is in trouble.
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