January 9th, 2011 | 
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Lower interest rates began his stamp on the economy print with previous moderate increases in lending in August further gained momentum. Private loans have grown by 2.9% from a revised 1.98% in July. Growth in M3 money supply, the broadest indicator of money circulating in the economy, grew by 4.38% from 3.7% in July increased. These figures show a reversal of the negative growth last year, but economists expect growth for credit only in single figures to continue. Mr. Johan Rossouw, an economist at Vunani Securities, said it was encouraging that credit growth through fundamental question of consumer driven. “The recovery could be more significant than is currently provided.” Against this background, the Reserve Bank less inclined now to be further lowered interest rates as it is the demand for credit may accelerate. In contrast, credit growth is still far from the more than 20% between 2004 and 2006 were the norm.
The robust credit growth for the month was mainly driven by mortgage and the category of other loans and advances, for the first time in 12 months showed positive growth. Mortgage growth was 4.8%, 4% in July, the highest in 12 months. Other loans and advances, which include credit cards, increased by 0.4% on an annualized growth of -0.6% in July. Growth in money supply in February 2010 a low of just 0.54% was recorded as credits to the bottom of the recession in November 2009 was a negative -1.09% was. Mr. Kgotso Radira economist at Investec, said credit growth is now showing promising signs of a recovery, but it is not expected to soon aardskuddend be. “Households are still cautious with their spending.” He expects credit in the second half of this year may come under pressure. It will not be room to move for the Reserve Bank denies in the light of lower inflation rates further reductions.
Ned bank’s economic team emphasized in their comments that the overall trend of lending remains fragile. It is particularly pointed out in installment financing and leasing finance. Installment finance term financing involves a car on credit while repaying hire purchase financing, primarily by businesses use to assets for sale. Installment finance in the month grew by 3.8%, but leasing finance is still at -22% deep into negative territory. Lending to moderate rises in the year, partly because households’ indebtedness due to higher wage settlements already starting to look better. “Meanwhile, it is likely that consumers and households rather the improved conditions will use to repay debt rather than new debt to go,” said Ned bank. Spending by households is important for economic growth because a large proportion of economic activity included. Economists are agreed that not much in the short-to medium-term of the corporate sector is expected to be.
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