CORE optimistic about double-digit credit growth but real sector credit slows

Jakarta (ANTARA) - Director of Research in Finance and Digital Economy at the Center of Reform on Economics (CORE), Etika Karyani Suwondo, stated that credit growth could still achieve double digits this year, despite the potential slowdown in demand from the real sector. She noted that such growth is likely to be driven by the disbursement of credit from previously approved applications. “Double digits are still possible, BI (Bank Indonesia) targets 8–12 percent. But it might be higher because it relies on the disbursement of already approved credit, not new expansions,” said Etika Karyani Suwondo when contacted by ANTARA in Jakarta on Friday. BI revealed that banking credit grew by 9.49 percent year-on-year (yoy) in March 2026, higher than the 9.37 percent yoy in February 2026. Based on usage groups, this increase was supported by investment credit, working capital credit, and consumer credit, which grew by 20.85 percent yoy, 4.38 percent yoy, and 5.88 percent yoy respectively in March 2026. Etika assessed that this banking credit growth is mainly not driven by real demand, but due to the decline in the BI reference rate (BI-Rate) by 150 basis points (bps) since September 2024, accompanied by a flood of liquidity. She explained that this reflects a transmission mechanism that is still obstructed between central bank policy adjustments and their impact on the real sector. She is also concerned that this condition will further slow credit demand in the real sector, especially if the global economy becomes increasingly uncertain due to the ongoing US-Israel-Iran War. Etika said that the current conflict in the Middle East has not yet had much direct impact on domestic banking credit distribution. However, she urged all parties to be vigilant and mitigate as early as possible against various emerging risk indicators. Some of those risk indicators, she continued, include the weakening rupiah exchange rate touching Rp17,304 per US dollar on Thursday afternoon (23/4) and capital outflows reaching 1.7 billion US dollars in January-March 2026. “OJK has also warned of potential NPL (Non-Performing Loan/bad loans) in the energy and logistics sectors. If the war prolongs, the impact will enter through rising energy prices and pressure on purchasing power,” said Etika.