By Masood Ahmed
In the midst of an early and uncertain economic recovery from the global crisis, countries in the Middle East and North Africa (MENA) region have been experiencing a sharp slowdown in the growth of credit to the private sector, by about 30 percentage points on average relative to precrisis peak rates.
For many sectors, firms, and households that depend on bank financing, this slowdown may be forcing them to scale back their spending plans, or to resort to scarce or costly alternative avenues for financing. Slow credit growth may therefore be constraining the strength of the recovery in the short run, in addition to limiting prospects for longer-term growth. Policymakers are understandably concerned.
Filed under: Economic Crisis, Economic research, Financial Crisis, IMF | Tagged: balance sheets, bank funding, bank profitability, capital losses, countercyclical policy, credit culture, credit demand, credit growth, Iran, Jordan, Kuwait, lending, liquidity, Morocco, nonperforming loans, private sector, Qatar, risk aversion, Saudi Arabia, supply side, UAE | 4 Comments »