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Jakarta Post

Weak loan growth, high savings signal further GDP contraction

  • Riska Rahman

    Jakarta

Jakarta   /   Mon, October 19 2020   /  01:00 am
Indonesian millennials knows how to assess their financial capabilities, allowing them to obtain loan in size the closest of the amount requested. (Shutterstock/Icatnews)

Slowing loan growth and rising savings point to a continued plunge in economic activity in the third quarter of this year as consumer spending weakens, economists say. Loan disbursement only grew by 0.12 percent year-on-year (yoy) in September, Bank Indonesia (BI) data show. That figure is much lower than 1.04 percent annual growth recorded in August. Last year, Indonesia’s banking industry recorded loan growth of around 6 percent. While loan issuance was almost stagnant, savings increased strongly last month. Banks’ third-party funds expanded by 12.88 percent yoy in September across the entire industry, higher than August’s figure of 11.64 yoy. “Most consumers are still concerned about the uncertainties surrounding the COVID-19 pandemic, so those in the middle and upper-middle class segment chose to park their funds in the banks,” Bank Permata ...