Report stated that credit growth excluding uncovered personal and sustainable loans from consumers tend to delay during periods of surplus liquidity | Photocredit: Adnan Abidi
Credit growth in the economy is more influenced by general economic activity than by the scope of the liquidity surplus, according to a recent report of Standard charteredAn international bank.
The report noted that although a high liquidity surplus can offer some support to unsecured personal loan growth (excluding sustainable loans for consumers), it does not automatically lead to broad credit growth.
It stated: “Credit growth depends more on economic activity than on the scope of the surplus of liquidity; however, uncovered personal loan growth (former consumers sustainableness) can get a large-scale liquidity surplus”.
Since the report stated that credit growth exclusively unclear personal and sustainable loans from consumers tend to delay during periods of surplus liquidity.
This trend suggested that the real demand for credit, which is closely linked to economic activity, is a more important engine than the availability or costs of funds.
“Lower economic activity causes action by the Central Bank to increase the surplus liquidity as a countercyclic measure,” the report said.
Despite such efforts, the overall credit (excluding uncovered personal and sustainable loans from consumers) has fallen as a share in GDP during previous episodes of a high liquidity surplus.
For example, the report emphasized that during the period from December 2016 to September 2017, when the surplus of liquidity rang between 2.6 percent and 3.3 percent of the net question and time obligations (NDTL), credit (excluding immersed personal and consumers sustainable loans) as a percentage of the GDP decreased from 48.9 percent.
This decline continued until mid -2019. Interesting is that the unsecured growth of personal loans (excluding sustainable consumer consumers) has shown a strong upward trend in recent decade. The size is more than doubled to about 6 percent of GDP.
Although this growth is largely powered by structural factors such as improved access to credit and the rise of digital loans, the report pointed out that his pace of expansion tends to increase during periods of a high liquidity surplus.
In March 2021 to March 2023, according to data that is shared by the report in the midst of a large liquidity surplus and relaxed credit conditions, the share of uncovered personal loans in GDP increased faster than during previous comparable episodes.
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Published on June 28, 2025
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