In the last few months, the slowdown in credit growth quickened, especially in the business segment. In the past three months, business credit declined in each of the months, highlighting deteriorated growth in investment in the first quarter. This trend is not expected to rebound soon in spite of expectations of rapid policy support, said Societe Generale in a research report. Consumer credit growth is expected to decelerate as labor market continues to decline, while support for credit programs from the government is expected to recede after the renewed focus on fiscal consolidation.
“In April, we expect credit growth to fall to 2.5% yoy from 3.3% yoy (the pace remains unchanged on a monthly basis at -0.7% mom) following the trends in business and consumer credit growth”, noted Societe Generale.
March’s pace of credit growth at 3.3% y/y is quite is quite poor as compared with average credit growth of almost 18% in 2010-2013. Due to declining credit growth and high inflation, real credit growth has been significantly negative at -5.6% y/y in March. Attempts to aid in rebounding credit growth have had temporary and negligible impact.
