Philippine bank lending fell for the first time in more than 14 years in December, reflecting weak consumer and business activity, with the trend expected to persist as coronavirus restrictions remain in place in many parts of the country.
Outstanding loans of universal and commercial banks, net of reverse repurchase placements, dropped by 0.7% in December from a year ago, despite a series of interest rate cuts by the central bank to boost lending.
The decline was the first since September 2006, preliminary data from the central bank showed, and some economists expect lending to remain weak given subdued consumer and corporate demand.
Production loans, comprising 87.4% of the combined loan portfolio of universal and commercial banks, fell 0.4% in December from a year earlier, while consumer loans rose at a much slower pace of 4.4% compared with November’s 7.1%.
Partial COVID-19 restrictions in the capital Manila were extended until the end of February to slow a spike in infections after year-end holidays, which could delay an economic recovery.
The Philippine economy contracted 9.5% in 2020, the biggest slump on record.
Speaking after the release of the gross domestic product data, President Rodrigo Duterte said on Monday, February 1, the Philippines, which was one of Asia’s fastest growing economies before the pandemic, was in a “really bad shape.” – Rappler.com
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