Economics: Internal credit sustains growth so far in 2024, especially in its consumer component
Although it continues to grow at a fast pace in response to the momentum of consumer credit, both from bank and non-bank sources, so far in 2024 financing to the non-financial private sector is showing a slight deceleration. In contrast, external financing has been contracting since 2022 and, due to the appreciation of the exchange rate, its fall is even more profound when expressed in pesos.
Bank (domestic) credit to companies accelerated its real annual growth rate in the April-May period, but still remains low, increasing just 2.8% for that two-month period after growing 2.2% in the first quarter of 2024. Within financing to the public sector, bank credit represents a minimal percentage of its domestic indebtedness (close to 1%), while close to 90% corresponds to government securities and the remaining 9% to other sources. However, the public sector accounts for almost 55% of total domestic financing of the economy, having been increasing its share since 2021.
In this week’s Outlook, we analyze the recent behavior of financing to both the private and public sectors in recent months.
And in news released this past week, June inflation came in higher than expected, rebounding to its highest level in a year. Even as the core rate fell, non-core inflation jumped by almost 1.5 percentage points from May to June in response to strong increases in fruit and vegetable prices. Merchandise inflation fell 10 bps, mainly due to lower prices for processed food. For May, growth in industrial activity skidded to its slowest pace since the single-basis-point uptick of November 2021 as manufacturing linked to the automotive sector once again performed poorly.
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