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.

Join the conversation! encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

We reserve editorial discretion to decide what will be published.
Read our comments policy for guidelines on contributions. publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Comments have been closed for this article.

Inside News24

Traffic Alerts
There are new stories on the homepage. Click here to see them.


Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.

Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire network.


Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.

Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.