Persistent drop in Singapore’s loan growth suggests slowdown of financial activity

Singapore’s loan continued to grow negatively by -1.2% y/y in February, the fifth consecutive month of negative loan growth. Business loans continued to decline, shrinking 3.4% y/y. Moreover, consumer loans declined further by 2.2% y/y, as compared with 2.4% in January.

According to DBS Bank report, consumer and business sentiments are being weighed down by a weaker labor market, higher cost of financing, highly uncertain economic scenario and domestic economic slowdown.

Furthermore, the continuous fall in loan growth implies that Singapore’s financial activity is slowing down, suggesting the nation’s financial sector is losing steam, added DBS Bank. The bank noted that this will be a threat to Singapore’s overall economic growth.