Credit growth increases more than expected

Growth in private sector credit extension increased more than expected in July to 5.65% year-on-year (y/y), from a slightly revised rate of 5.28% y/y in June, according to Standard Bank’s Tebogo Mosepele. “The outcome was higher than Standard Bank’s forecast of 4.9% y/y and Bloomberg’s consensus expectation of 4.85% y/y,” he told FTWOnline. “Growth in money supply moderated to 5.58% y/y in July, after rising to 6.03% y/y in June. However, the data still surprised the market on the upside in July, (Standard Bank 5.1% y/y; Bloomberg consensus 5.0% y/y).” But despite this upward tick, credit growth should remain under pressure in the second half, despite the low interest rate environment, according to Mosepele. “The sluggish momentum in credit would be a result of less favourable base effects and a high unemployment rate,” he said.