Credit Target For The Third Quarter Of 2021 Is Believed To Be In Shambles, BI Says The New Variant Of COVID-19 Is The Culprit

JAKARTA - Bank Indonesia (BI) predicts that lending in the third quarter of 2021 will experience stronger pressure due to the impact of the spread of the new COVID-19 variant which hampers economic activity.

"Credit growth is expected to be lower than the previous projection in the third quarter of 2021, in line with the decline in economic activity due to restrictions on mobility due to the COVID-19 pandemic," said BI Governor Perry Warjiyo in BI's official website quoted on Sunday, July 25.

However, the monetary authority is optimistic that a reversal of the situation will occur in the next quarter before the close of the year.

"We estimate that credit will increase again in the fourth quarter of 2021," he said.

In fact, in the early period of the year before the COVID-19 delta variant spread, BI said that signs of growth in the intermediation sector could already be seen even though it was limited.

"Banking intermediation has started to grow positively, although not yet strong, at 0.59 percent year-on-year (yoy) in June 2021. This improvement was driven by the improvement in credit demand in line with the continued recovery in performance and activities of corporations, households and MSMEs," he clear.

On the supply side, the positive credit growth was driven by the loosening of the index of lending standard.

"With these developments, Bank Indonesia estimates credit growth in 2021 to be 4 percent to 6 percent and growth in third party funds to 6 percent to 8 percent," he said.

"Bank Indonesia will continue to strengthen policy synergies with the KSSK (Financial System Stability Committee) in order to maintain financial system stability and increase credit and financing to the business world in priority sectors, including MSMEs," concluded Perry.