Credit growth accelerates but ‘still relatively weak’
CREDIT extension to the private sector (PSCE) grew by 9.59% year on year in November‚ accelerating from 8.35% in October‚ South African Reserve Bank figures released on Monday showed.
South Africa’s M3 money supply, its broadest measure, grew 6.26% year on year in November, up from 5.69% year on year in October.
Year-on-year PSCE growth had slowed in October compared with September.
Nedbank noted that the main driver of money supply growth was the household sector, where credit demand increased by 10.4% year on year in November after a 9.4% gain in October. Corporate demand growth also accelerated, rising 9.2% year on year in November from only 7.3% year on year in October.
"Credit growth remains relatively weak for this stage of the economic cycle, with most of the growth in unsecured credit to individuals," Nedbank said.
"The composition reflects threats in the real economy, where growth in consumer spending continues to outstrip that of private sector investment spending."
Total loans and advances‚ which is PSCE excluding investments and bills discounted‚ recorded year-on-year growth of 9.86% in November from 8.5% year on year in October.
Total domestic credit extension growth amounted to 9.78% year on year in November from an 8.01% year-on-year increase in the prior month.
The Reserve Bank also said on Monday that its international liquidity position rose to $50.813bn in November from $48.626bn in October.
Nedbank reiterated its view that interest rates would remain on hold for some time to come.
"The latest credit extension figures still point to moderate demand growth in the economy," the bank said. "We believe that the Reserve Bank’s monetary policy committee will keep monetary policy neutral over an extended period in order to balance weak growth prospects and rising inflationary pressures.
"We therefore maintain our view that interest rates will remain unchanged for most of 2013, and a reversal in policy easing is likely only late in the year or even in 2014. However, any deterioration in both the global and domestic economies would increase the chance of another cut."