global Uncertainty tipped to put brakes on growth

2012-03-01 00:00

THE uptake of credit in the corporate sector lifted overall private sector credit extension in January 2012 to a higher than expected growth rate of 7,3%, compared to 6,2% in December 2011.

The SA Reserve Bank said yesterday that corporate credit demand continued to grow at a healthy rate of 8,3% year on year.

Household credit growth was slightly muted, growing at a rate of 6,5% year on year in January.

The increased demand for corporate credit is good news for the economy as it suggests that economic growth will remain positive in 2012, but the rate of credit growth is expected to cool this year.

Instalment sales rose by 11,4% in January 2012 compared with 10,7% growth in December 2011.

Nedbank economist Isaac Matshego said that while the figures remained positive, growth is set to slow in 2012 given the uncertain economic environment.

“Credit growth will remain relatively subdued in 2012, held back by uncertain global and domestic prospects, increased regulatory demands and existing high personal debt.”

Matshego said there could be an interest rate hike in the final quarter of this year, in contrast to Standard Bank economist Tebogo Mosepele.

Mosepele said household credit demand was likely to slow further as households would continue to pay down debt.

“The fragile macro-economic environment, against the backdrop of rising inflation, low levels of consumer confidence and slow job creation, is not supportive of buoyant consumer demand and consumers’ willingness to take up credit,” said Mosepele.

As expected, the growth in mortgage finance, which accounts for about half of the market, was steady but unspectacular at 2,4% year on year in January 2012, reflecting the challenges faced by the residential property sector.

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