Euro-area credit growth will continue to gain traction, forecasts Standard Chartered Research.
- M3 money supply likely expanded by 4.2% y/y in February, up from 4.1% prior.
- Euro-area corporations are still deleveraging; however, the pace is slowing.
- Euro-area loans to non-financial corporations likely declined by 0.7% y/y versus a 0.9% decline prior.
- The strong third allotment of the Targeted Long Term Refinancing Operation (TLTRO) showed that euro-area banks expect loan demand to pick up.
- This is supported by the European Central Bank's most recent banking survey which showed rising demand for loans and less tight lending criteria.
- We believe demand for credit will continue to rise as investors see stronger growth ahead, supported by lower oil prices, accommodative monetary policy and a weak euro.
