One of characteristics of the Argentine financial system is the very low credit penetration. But despite this restriction, there is always room for an additional drop.
In a list of 173 countries measured by the World Bank on the total amount of bank credit to the private sector, Argentina appears among the seven with the lowest level. It came from a 16% change in GDP in 2016, fell to just over 15% the following year, fell to 11.4% in May 2018 and a year later collapsed to 7.4%, with preliminary data economic activity that arises from the Central Bank.
Yes well In nominal terms and adjusted for seasonality, the Central Bank last May reported lending in pesos to the private sector rose 0.9% in May, compared to April –driven by credit card financing and advances on account so that companies can make overdraft, in real terms, they contracted again. Both the accumulated interest rates and the inflation of the period were located in a singularly higher band: 6% in the first case and about 3% in the second.
The real decline in year-on-year terms was substantially more pronounced, because despite the fact that the interest rate rose from a range in May 2018 from 36% to 43% a year for personal segments, such as companies that use overdraft lines and discount documents, for a strip of 66 to 76% a year later, and inflation accelerated from 26% to 57%, the total value of private credit rose only 2% to $ 1.52 billion.
This demarcation of families and companies, in a context of high recession and acceleration of inflation, to an interval of more than 56% in the last 12 months, in this case among the 10 or 15 highest on the planet, has determined that Argentina depart – perceptibly of the worst positions in the world ranking and in the region in the use of credit.
From World Bank statistics, it appears that the world average has a private credit and GDP ratio of 104.7%, while in Argentina it has fallen to less than one tenth; and in the region, Chile shows 112.6%; Bolivia with 64.5%; Brazil 59.8%; Colombia 49.4%; Peru 42.3%; Paraguay 40.2%; Mexico 35.5%; Ecuador 32.2%; and Uruguay 26.3 percent.
In both Among countries with geoeconomic characteristics similar to Argentina, the use of credit in proportion to GDP is located at 124.2% in Canada; 142.5% Australia; 147.5% of South Africa; and 154.2% from New Zealand.
Higher drop in corporate loans than households
While those destined for physical persons showed greater resistance, in all cases there were notable falls in the values adjusted by inflation, between 26% and 49%.
Between the commercial loans, the financing granted by current account advances was highlighted in May, which presented a nominal increase with no seasonality of 2.4%, in the month in which the companies demand liquidity to meet May's own tax maturities. But they still held a smaller variation than interest rates and inflation.
"In real terms and adjusted for seasonality, peso loans to the private sector continued to fall, albeit at lower rates: they fell more than 5% in the last months of 2018, while in the month under analysis they decreased by 2%," notes the Monetary Report of the Central Bank.
The analysis adds: "For the eighth consecutive month, the BCRA met its Monetary Base target, the monthly average reached US $ 1.34 billion in May, which meant a slight excess of compliance with the target for the period.
But To recreate the culture of savings, the key to developing credit and boosting productive investment, is a necessary condition for stabilizing prices of the economy. This will pave the way for nominal interest rates to fall to levels consistent with corporate profitability and the ability to pay workers and retirees, and increase the credit / GDP ratio to levels close to the regional average, which is several times higher.