CREDIT extended to the domestic private
sector grew 9.02% year on year in February, accelerating from growth of
8.54% in January, Reserve Bank figures released on Thursday showed.
Private sector credit extension had been expected to have increased at a relatively steady rate of 8.5% year on year last month.
Investec analysts say annual loan growth is expected to remain relatively muted this year due to the tighter monetary policy stance, high existing levels of indebtedness among households and tight lending conditions.
The Reserve Bank has previously noted that credit uptake by households in particular has been modest, "as consumers face rising interest rates and tighter credit conditions" as well as "high levels of unemployment, weaker domestic economic growth and prospects, negative wealth effects stemming from weak growth in property and other asset prices, and stricter credit regulations".
Total credit extension growth in February was at 9.5% year on year from 8.5% year on year in January.
Money supply
The rate of growth in SA’s broad M3 money supply slowed to 10.25% year on year in February from 10.28% year on year in January.
Money supply reflects the amount of money circulating in the economy.
When money supply increases, it typically increases the availability of loans, which individuals and businesses use to make purchases. The higher money supply growth, the higher the growth in available funds.
Conversely, if money supply growth slows, it can have a negative effect on economic growth.
If money supply grows much faster than the economy, rapid inflation ensues.
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| Credit. Picture: ISTOCK |
Investec analysts say annual loan growth is expected to remain relatively muted this year due to the tighter monetary policy stance, high existing levels of indebtedness among households and tight lending conditions.
The Reserve Bank has previously noted that credit uptake by households in particular has been modest, "as consumers face rising interest rates and tighter credit conditions" as well as "high levels of unemployment, weaker domestic economic growth and prospects, negative wealth effects stemming from weak growth in property and other asset prices, and stricter credit regulations".
Total credit extension growth in February was at 9.5% year on year from 8.5% year on year in January.
Money supply
The rate of growth in SA’s broad M3 money supply slowed to 10.25% year on year in February from 10.28% year on year in January.
Money supply reflects the amount of money circulating in the economy.
When money supply increases, it typically increases the availability of loans, which individuals and businesses use to make purchases. The higher money supply growth, the higher the growth in available funds.
Conversely, if money supply growth slows, it can have a negative effect on economic growth.
If money supply grows much faster than the economy, rapid inflation ensues.
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