SOFIA (Bulgaria), December 5 SeeNews) – The financial wealth of households in the countries of central and eastern Europe (CEE) will reach in 2009 some 935 billion euro ($1.4 trillion), or 64% of the region's gross domestic product (GDP), Italian banking group UniCredit said.
The financial wealth of households in the region is expected to rise to 718 billion euro this year, up by 20% from 2006, UniCredit said in its latest report CEE Households’ Wealth and Debt Monitor, November 2007. It gave no figure for the projected wealth-to-GDP ratio for the current year.
“We anticipate some level of slowdown in the following years, with growth rates still in the double-digits, averaging 14% a year in 2008-2009,” it said.
The CEE aggregate of the report comprises Bulgaria, Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Russia, Slovakia, Slovenia and Turkey.
“In most CEE countries, the growth of financial wealth will continue to greatly exceed that of the real economy,” UniCredit added.
The bank sees the demand for durables and the far-from-saturated housing market as the main driving forces behind the projected increase of the household debt in the next two years.
Overall, CEE household financial liabilities are anticipated to slow down their pace of growth to an average of around 22% a year in the next two years, reaching 26% of GDP in 2009, up from 18% in 2006.
In the southeast European countries that have high external imbalances and where banks are increasingly financing credit growth with external borrowing, the risk of a credit squeeze is higher, UniCredit said.
The report forecasts that the mortgage loans will grow further, increasing by an average 23% in the period 2008-2009 and will continue to account for most of the growth in total household indebtedness in the CEE. At the end of this year, mortgages are expected to reach 9.4% of the GDP, up from 1.0% at the beginning of the decade.
“Although the level of household indebtedness remains low compared to the more developed neighboring countries, risks have clearly risen,” the report said.
The risks in the region are the expected prevalence of tight monetary conditions, the rising cost of refinancing for banks and the increasing risk of saturation in the mortgage segment caused by the already high level of cumulated debt, it added.
Following are projections for the financial wealth and liabilities of households of four countries of southeastern Europe covered by the UniCredit report.
BULGARIA
|
|
2006 |
2009 |
| Financial wealth (bln euro) |
11.4 |
21.1 |
| Financial liabilities (bln euro) |
4.9 |
10.5 |
| Financial wealth (% of GDP) |
45% |
60% |
| Financial liabilities (% of GDP) |
20% |
30% |
| Per capita financial wealth |
1,486 |
2,795 |
| Per capita financial liabilities |
644 |
1,389 |
ROMANIA
|
|
2006 |
2009 |
| Financial wealth (bln euro) |
23.3 |
43.5 |
| Financial liabilities (bln euro) |
12.2 |
29.3 |
| Financial wealth (% of GDP) |
23% |
31% |
| Financial liabilities (% of GDP) |
12% |
21% |
| Per capita financial wealth |
1,080 |
2,042 |
| Per capita financial liabilities |
567 |
1,376 |
CROATIA
|
|
2006 |
2009 |
| Financial wealth (bln euro) |
29.2 |
44.8 |
| Financial liabilities (bln euro) |
13.3 |
20.7 |
| Financial wealth (% of GDP) |
86% |
105% |
| Financial liabilities (% of GDP) |
39% |
49% |
| Per capita financial wealth |
6,574 |
10,075 |
| Per capita financial liabilities |
2,999 |
4,668 |
SLOVENIA
|
|
2006 |
2009 |
| Financial wealth (bln euro) |
23.6 |
37.3 |
| Financial liabilities (bln euro) |
5.9 |
10.1 |
| Financial wealth (% of GDP) |
78% |
98% |
| Financial liabilities (% of GDP) |
19% |
27% |
| Per capita financial wealth |
11,778 |
18,504 |
| Per capita financial liabilities |
2,943 |
5,025 |
($ = 0.6797 euro)