JAKARTA, Oct. 17 (Xinhua) -- Expansion of banking credits in Indonesia was estimated to accelerate at a slower pace this year as flagging global economic growth has turned banks to be cautious in disbursing credits.
Indonesian central bank estimated loan growth will log 10 to 11 percent this year end, drifting lower from 12.45 percent last year, director of macro-prudential policy of the lender Retno Ponco Widarti said on Thursday.
"The banking credit growth (this year) may ratchet down from that in last year," the director said.
The International Monetary Fund has recently ratcheted down its global economic forecast for this year to only three percent compared with its July estimate of 3.2 percent due to trade war.
Retno said that the level of banking intermediary function is also forecast to tick down this year from that of 12.1 percent last year, but did not elaborate further.
Although the weakening of loan growth was predicted to occur in most sectors, banking credits for consumption was projected to positively log growth, especially the credits for house's purchase, he said.
To pare down the risks of the global economic slowdown on loan expansion, the director reaffirmed that the central bank has so far aggressively applied loosening policy since July, media reported.
The central bank has trimmed for the third times this year a seven-day reserve repo rate a 25 basis points to 5.25 percent in September after aggressively ratcheted up the rate by 175 basis points to 6 percent last year to shore up rupiah against greenback amid hawkish tone of the U.S. Federal Reserve.
"We have commenced since July applying easing monetary policy (amid prudent) macro-prudential policy," said Retno.
Indonesia's export and import have drifted lower on yearly basis in recent months, except in June when import moved up, as global economic uncertainty has cut demand and prices of Indonesia's exported product, most of them commodities, and weakened economic activities.
The Indonesian government has heralded that the 5.3 percent economic growth target for this year is likely not to be achieved as global economic slowdown has eroded the country's exports and weakened imports, particularly the shipment of capital goods. The growth of foreign direct investment remains subdued amid steady consumption.
