Private Sector Credit is Slowing Down

Up to February 2018, the growth rate of bank loans for trade, services, consumption and housing activities decreased considerably compared to the same period last year.

Wednesday, June 6, 2018

According to figures from the Central Bank of Costa Rica, between February 2017 and the same month of this year, the annual growth rate of credit granted by the financial system to the private sector fell from 13% to 7%. 

When reviewing figures on the main economic activities, it can be seen that between the months in question, the speed with which financing to the private sector had been growing slowed significantly. For example, the growth rate of credit for commercial activities fell from 13% to 3% in the period in question, while that of credit for services decreased from 16% to 7%. Financing for consumer activities fell from 13% to 10%, and in the case of housing loans, the growth rate fell from 12% to 8%. 

In regards to this, Adriana Rodríguez, manager of Economic Studies at Scotiabank, explained to Nacion.com that " ...'Initially demand for housing and consumption was affected by the upward scenario in interest rates in dollars, whose main reference, the Federal Reserve rate, has experienced six increases of 25 basis points since the end of 2015 to date, and at least, one more increase has been estimated for this year."

For his part Alonso Elizondo, executive director of the Chamber of Commerce, explained that " ... the slowdown in credit is a phenomenon that has been occurring in recent months in a generalized way in the economy, where the trade sector is not the exception. "

See complete figures by the Central Bank of Costa Rica. (In Spanish)

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