Greek May household credit growth slows to 7.3 pct

ATHENS, June 30 (Reuters) - Growth in Greek household borrowing slowed to an annual 7.3 percent pace in May from 8.4 percent in April, the country's central bank said on Tuesday.

A sharp slowdown in economic activity coupled with tighter credit conditions are eating into the loan growth that fuelled consumption and economic expansion in Greece and boosted bank earnings.

Greece's economy, about 2.5 percent of the euro zone, may slip into recession in 2009 after years of 4 percent growth, the central bank has said, a view shared by the EU Commission, the IMF and the OECD.

The Bank of Greece (BOGr.AT) said household loan balances grew by 338 million euros ($477 million) in May. Mortgages grew by a slower 6.9 percent annual pace or 186 million euros, from 7.8 percent in April.

Consumer credit expanded by 8.4 percent, decelerating from 9.8 percent in April.

High budget deficits and a heavy debt burden leave little room for fiscal stimulus. Earlier this month, the Greek government cut its 1.1 percent economic growth forecast to zero this year.

Economic growth slowed to an annual 0.3 percent clip in the first quarter from 2.4 percent in the last quarter of 2008.

Greek authorities have sought to keep the pace of credit expansion above 10 percent this year and came up with a 28 billion euro bank support package to keep the economy adequately funded.

But the pace of credit expansion to the private sector is now seen slowing to 5 to 6 percent by the end of the year, Greece's central bank chief said last week.

The Bank of Greece said credit to business also slowed to an annual 10.2 percent clip in May from 11.8 percent in April. (Reporting by George Georgiopoulos; Editing by Ruth Pitchford)