Indonesia's loan growth edges down amid weak demand

Source: Xinhua | 2020-01-17

Indonesia posted a lower loan growth last year as the weakening global economy led debtors to adjourn business expansion.

The Indonesia Financial Services Authority (OJK) said on Thursday that loan growth nudged down to 6.08 percent in 2019 from 11.8 percent in 2018.

The fluctuation of the global economic condition has risked Indonesia's economy, so as to affect the country's banking industry, said OJK head Wimboh Santoso.

Indonesia's gross domestic product growth was estimated to accelerate below the government's initial target of 5.3 percent last year as the flagging global economy has eroded the country's exports and impacted foreign direct investment and consumption.

Santoso said many Indonesia's firms had borrowed funds from foreign creditors, citing that the number of the companies in such activity rose significantly.

"Many Indonesian firms borrow funds from the creditors abroad," he said at the Ritz Carlton Pacific Place building.

The official said low interest rate of the loan set by the foreign creditors and relatively stable rupiah value against the U.S. dollar have prompted the companies to borrow funds from the foreign creditors.

Indonesia recorded an inflation of 2.72 percent, the lowest since 1999, with core inflation falling to 3.02 percent in the year from 3.07 percent in the previous year, according to data from Indonesia's Central Agency of Statistics.