Loans growth in Singapore falls below 1% in Nov 2005

Domestic loans growth fell to below 1% in November from 1.4% in October, continuing a worrying trend. But there were some tentative signs credit demand may start to pick up. According to the Monetary Authority of Singapore, domestic loans at end-November rose a fractional 0.88% to $181.8 billion, continuing a 12-month trend of lower growth.

Loans growth has been falling since November 2004, when it was 5.9%, despite strong economic growth. The loan-to-deposit ratio also seems to have plateaued. At end-November it was 0.814, against 0.811 in October which was a 15-year low. The loan-to-deposit ratio has been falling since it hit 0.90 in September 2003.

DBS Bank economist Chua Hak Bin says growth recovery has been unbalanced. 'There's this dichotomy going on - strong headline GDP numbers yet sluggish domestic demand,' he said. Growth in 2005 has been fuelled by exports. Private consumption has risen only 2.3% and investment contracted 4% in the first three quarters. Weakness in consumer demand may be due to Central Provident Fund (CPF) cuts and people's more cautious outlook, he believes.

(2006-01-06 15:18:34 SGT) [Biz] Permalink

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