Bank lending in Singapore closed last year on a flat note, reflecting the contraction in lending in key business segments that included finance, construction and trade.
Loans through the domestic banking unit - which captures lending in all currencies, but mainly reflects Singapore-dollar lending - stood at $652 billion in December, compared with $654 billion in November, preliminary data from the Monetary Authority of Singapore (MAS) showed yesterday. This reversed the 0.6 per cent month-on-month gain in November.
Business loans fell 0.8 per cent to $390 billion in December, compared with the 0.5 per cent increase in November.
One of the largest contractions was in loans to financial institutions, which make up the second-largest contribution to business lending, with these shrinking 1.4 per cent to $98.9 billion.
Lending to the construction business, the biggest segment, closed flat at $120 billion, while lending in the general commerce space ended 1.1 per cent lower at $68.5 billion.
Prospects for business growth this year, however, are brighter, with the World Bank estimating the global economy should crank out a stronger-than-expected 3.1 per cent expansion. The synchronised recovery across major economies means 2018 could be the first year since the financial crisis that the global economy will be operating at or near full capacity.
That being said, the World Bank cautioned that risks remain. These include the possibility of financial stress, increased protectionism and rising geopolitical tensions.
In a speech last month, MAS managing director Ravi Menon said Singapore has been able to tap the strength in the global electronics sector, demonstrating that it remains competitive despite rising concerns in this regard. But he, too, noted risks in this Goldilocks economy - "not too hot, not too cold" - that include the "mama bear" of protectionism and the "baby bear" of financial instability.
Consumer loans grew 0.4 per cent to $262 billion in December, compared with a 0.9 per cent gain in November. The weaker performance reflected the smaller gain in housing loans - which make up the bulk of consumer lending - at 0.5 per cent to $200 billion, compared with 0.7 per cent growth in November.
From a year ago, bank lending in December was up 5.6 per cent. This was weaker than the 7.1 per cent year-on-year growth in November.
