ROME | Thu Dec 20, 2012 12:38pm EST
ROME Dec 20 (Reuters) - Bad loans will keep on rising in Italy until 2014, making tight credit conditions even more difficult, banking association ABI said.
Bad loans will reach 7.3 percent of total credit in 2014, the highest ratio seen since 1998, ABI said on Thursday in its twice-yearly report, adding: "The rise in credit risk will be a major brake on loans."
Earlier this week, ABI said bad debt at Italian lenders had risen near 120 billion euros ($159 billion) at the end of October - up nearly 50 billion from two years ago - to account for 6.1 percent of total loans.
Italian firms and households are struggling under a recession that began in the middle of last year, with consumer spending falling at its steepest rate since World War Two.
ABI forecast gross domestic product would shrink 2.1 percent this year and 0.6 percent in 2013, before rising 0.8 percent in 2014. ($1 = 0.7555 euro) (Reporting by Stefano Bernabei; Writing by Gavin Jones; Editing by Dan Lalor)
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