Private sector credit growth slows unexpectedly
The slowdown - where it had been expected to hold steady - reinforces the perception of low confidence among consumers and businesses
SA’s private sector credit growth moderated more than expected in July, reinforcing the perception of low business and consumer confidence. Growth in the extension of credit to the private sector — consumers and business — moderated to an annualised 5.71% in July from 6.16% in June, Reserve Bank data released Wednesday showed. Analysts had expected growth in private sector credit to have held broadly steady at 6.1% in the review period. The recent interest rate reduction, and the possibility of a further cut in 2017, may not translate into meaningfully higher demand for credit given that retail banks tightened credit criteria for both households and companies, said Investec economist Kamilla Kaplan. Growth in M3 money supply, the Bank’s broadest measure of how much money is circulating in the economy, accelerated to 6.81% from 5.96%. If money supply growth slows, it can have a negative effect on economic growth by leading to tighter lending. Conversely, when money supply increases, ...
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