Forecast: Slower Lending on the back of slowdown in economy

Gatot Suwondo, president director of Bank Negara Indonesia, the country’s fourth-largest lender by assets, said he expected a slowdown in lending.

“We are seeing a lot less companies coming to us seeking financing for new projects,” Gatot told reporters on the sidelines of the Asia-Pacific Economic Cooperation CEO Summit in Nusa Dua, Bali, earlier this week.

Meanwhile, consumer demand, which accounts for half of gross domestic product, slowed in August, according to BI’s Retail Sales Survey.

Growth in the retail sales index slowed to 1.3 percent year-on-year, according to the survey published on Thursday, below the 15.2 percent growth posted in July.

On a month-by-month basis, retail sales shrank by 3.2 percent in August from the preceding month, in line with demand returning to normal after the Islamic holiday of Idul Fitri.

The slowdown in retail sales affected all commodity groups, with clothing posting the biggest decline, the central bank said in the survey report.

BI says it expects retail sales to decline further — dropping 14.3 percent in September compared to August — as consumers cut back on expenses after the high-spending month of Ramadan and Idul Fitri.

Consumers also felt less optimistic about the economy, with the Consumer Confidence Index falling in September to 107.1 from 107.8 in August, the central bank reported. An index reading above 100 suggests optimism.

(Source: The Jakarta Globe)