TIRANA, Oct. 19 – The consumer confidence slightly dropped in the third quarter of the year when households became more pessimistic about their income and spending prospects as well as big purchases.
A central bank survey shows the consumer confidence index dropped by 0.5 percent in the third quarter after slightly recovering in the previous quarter, standing 1.8 percentage points below its long-term historical average.
Households expect the country’s economic situation and their personal financial situation to slightly improve but remain pessimistic over future big purchases and the current and expected savings situation.
Another Bank of Albania survey shows households increased their demand both for consumer and home loans in the third quarter of the year.
Households, who account for only 28 percent of total credit have in the past few years shifted to borrowing in the national currency avoiding exchange rate risks. However, foreign currency loans continue dominating home loans as apartments are commonly sold in Europe’s single currency.
Yet, informal borrowing remains widespread and accounts for 16 percent of total credit, according to another central bank survey.
Informal borrowing among households registered a slight decrease in the first half of this year, but remained widespread as the gap between deposit and loan rates in the national currency widened to 10-fold, poorly reflecting the consecutive cuts to the key interest rates the central bank has made in the past few years.
More than half of indebted households, some 57 percent, said they had addressed informal sources, mainly friends and relatives, to borrow in the first half of this year, a 4 percent decline compared to the second half of 2015, according to a nationwide survey with 1,200 households in urban and rural areas conducted by the central bank.
