Loan growth is expected to show a slight increase in the second half of the year as a recent rise in government spending has started to trigger the countryâs economic growth, analysts and officials have said
oan growth is expected to show a slight increase in the second half of the year as a recent rise in government spending has started to trigger the country's economic growth, analysts and officials have said.
The positive signs were revealed through the latest increase in sales in the cement, automotive and retail sectors, sectors that are is often seen as key economic growth indicators in emerging markets, according to Tjandra Lienandjaja, head of equity research at Mandiri Sekuritas.
The latest data from the Association of Indonesian Automotive Manufacturers (Gaikindo) revealed that car sales reached 90,534 units in August, an increase of 62.78 percent month-to-month from the 55,615 units sold in July.
'Sales in those sectors always increase after the Ramadhan and Idul Fitri festivities, but this time the surge was quite significant, probably due to growth in government spending,' Tjandra said in a press briefing on Monday.
As the economy has started to pick up, Tjandra said bank loans were expected to grow higher in the second half, and would likely stand at between 11 and 12 percent by the end of this year, higher than the 10.2 percent recorded in the first half of the year.
According to Tjandra, the forecast was based on a calculation of the country's loan growth, which declined to 9.7 percent year-on-year (yoy) in July, even though Bank Indonesia's (BI) latest temporary assessment showed that lending might have grown 10.9 percent in August.
BI spokesperson Tirta Segara said the central bank was convinced that the government's latest economic policy package would help trigger growth in domestic consumption, which in turn would increase demand for bank loans.
'BI remains with its prediction of a loan growth range of around 11 to 13 percent this year,' Tirta said recently.
The Financial Services Authority (OJK) has also made a similar prediction by putting loan growth at around 11 to 12 percent this year as most banks slashed their full-year lending targets to around 13.4 percent in their revised business plans.
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