The difficult situation created in the economy by Covid-19 has led individuals, not only to reduce the demand for loans for the purchase of homes and consumer goods, but also to be put in difficulty to pay the obligations they have, being forced to borrow to pay off debts.

In the latest Credit Activity Survey tables, published by the Bank of Albania, there is a significant increase in the need for debt refinancing, which is the only one that has a positive balance of 16.1 for the second quarter of the year.

According to the Bank, the positive value shows that this factor, in this case the debt refinancing, has increased the demand for credit. This is the first quarter that this factor is growing so fast, since the Bank of Albania published this indicator.

On the contrary, the need for financing for consumption and house purchase has marked a strong decline, marking the lowest historical levels, since the first quarter of 2009, when the Bank of Albania reports the data.

The data of the Bank of Albania show that the need for financing for home purchases marked a negative balance of -41.6 points in the first quarter and -15.4 in the second, the most negative results since the data are reported, from 2009. The decline of strong in the first quarter is also related to the situation created by the November 26 earthquake which was accompanied by fear and uncertainty. Individuals also have negative feelings about current and expected developments in the housing market, including prices, in the first and second quarters, with negative balances of -18.3 and -25.9, respectively.

Individuals do not even think about borrowing for consumer purchases. The balance of consumption financing needs was negative in both the first and second quarters, at -36.7 and -21.7, respectively. These are the most historically negative levels since the measurement of the index began in 2009.

The survey shows that there is a significant deterioration in the solvency of households, in the first and second quarter of this year, where the negative balance is respectively with -17.2 and -43.7%, from about zero that was in 2019, marking the level m lowest since 2009.

The closure of the economy for almost three months, in order to curb the spread of the coronavirus is estimated to have had a strong effect on the economy. The government expects the decline this year to be 4.3%, while financial institutions' expectations range from -5% for the IMF and the World Bank, to -9% from the European Bank for Reconstruction and Development (EBRD) ./ MONITOR