Slowing Economy, Bank Credit Growth in Single Digits

The sluggish domestic economy caused Indonesian bank credit to grow only in the single digits in 2016-2017. This is in contrast to the period from 2010-2015, when bank lending consistently grew by over 10 percent. Indeed, in the last two years, bank credit growth has been lower than during the 2009 US financial crisis, when credit grew by over 9 percent.

Domestic bank credit even recorded growth exceeding 20 percent several times, supported by average economic growth above 6 percent. However, since 2013, national economic growth has been below 6 percent. In 2017, domestic economic growth was targeted at only 5.2 percent, and 5.4 percent for the following year.

Bank credit at the end of June 2017 grew by 7.75 percent to Rp 4,991 trillion compared to June of the previous year. In 2016, bank credit disbursement grew by only 7.87 percent compared to the previous year.