(Still) Slowing M2

As of Feb’16, the M2 growth still showing deceleration to 7.2% from 7.7% in previous month. The sources of deceleration are still the same:

Slowing Quasi money growth
Slowing Credit growth
Increasing Net claim to central government

Another factor that worsening the growth is slowing M1 growth. With time deposit rate cap, and aggressive government bond issuance, the crowding out effect explained the slowing saving growth (M1).

Increasing Net claim to central government (which is suspected to be higher regional transfer that can’t be disbursed) is also become a red flag.

A big worrying data is coming from the deceleration of working capital credit growth which drop significantly from 6.9% yoy in Jan’16 to 4.9% yoy in Feb’16, especially coming from manufacture sector (drop from 9.3% in Jan’16 to 4.6% in Feb’16). Investment credit is also down from 13.8% to 12.7%. This data is indicating that the real sector hasn’t see a recovery or optimist view since they tend to hold back their expansion and see some slack business environment.

Slowing credit growth on all types put economy recovery on threat

— -end of post #38