Bank Indonesia predicts lending growth amid economic upturn
(21 October 2015 – Indonesia) Indonesia’s central bank has indicated that loan growth will continue to stay above 11 percent for the remainder of the year, with the country’s economy expected to grow at a higher rate.
Bank Indonesia (BI) spokesperson Tirta Segara said the bank was maintaining its prediction that bank loans would stay in the range between 11 and 13 percent year-on-year this year.
The outlook was based on BI’s prediction that Indonesia’s economy would grow between 4.7 and 5.1 percent this year, Tirta said.
“In accordance with economic activity and the central bank’s more relaxed macro-prudential policy, loans will continue to grow to above 11 percent year-on-year,” Tirta said in a recent statement.
Following the easing of domestic economic uncertainty, a stronger currency and increased government spending, the central bank may be able to relax its monetary policy, and reduce its interest rate, which is currently sitting at 7.5 percent.
However, bank loans would remain in the range of 11 to 13 percent as recent acceleration of state construction projects had yet to trigger multiplier effects in the private sector, Tirta said.
The central bank’s latest survey shows diminishing optimism among bankers regarding overall loan growth this year, with average loan growth predictions revised down to 11.9 percent from 12.2 percent in the previous survey.
The Financial Services Authority echoed the view that bank loans could reach the higher end of the 11-13 percent range, as some types of credit, such as micro-lending, were rising.
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