CAPE TOWN - The SA Reserve Bank on Wednesday said that private sector credit in the country saw its weakest growth in five months in July after it rose 5.7% year-on-year last month, slowing from a 6.16% rise in a month earlier as the sluggish business confidence slowdown corporate credit intake.
The constrained growth in the corporate credit resulted mainly from a further moderation in the growth of general loans and advances, which comprise nearly half of total corporate credit.
Kamilla Kaplan, an economist at Investec, said credit conditions were expected to remain relatively subdued in view of the weak economic growth backdrop and depressed business and consumer confidence.
“The recent interest rate reduction, and possibility for a further cut, may not necessarily translate to meaningfully higher demand for credit given that retail banks tightened credit criteria for both households and corporates,” Kaplan said.
In June, the Rand Merchant Bank (RMB)/ Bureau for Economic Research (BER) Business Confidence Index (BCI) indicated that business confidence in the second quarter of this year slumped to levels last seen in 2009 largely driven down by persistent weak business activity.
The BCI plunged by 11 points to 29 points in the period, with nine out of ten respondents having said they viewed the prevailing business conditions as unsatisfactory. Meanwhile, expansion in the broadly defined M3 measure of money supply went up 6.81% from a year earlier, compared to a 5.9% rise in June and above expectations of a 6% rise
- BUSINESS REPORT