Indonesia's loan growth expected to rise in 2017: c. bank

Indonesian central bank has forecast a better loan growth next year as the economic activity expands.

Deputy Governor of the Central Bank Mirza Adityaswara revealed on Monday that the loan growth could reach 10 to 12 percent next year, rising from this year's revised expectation of 6 to 8 percent.

With the accelerating of the economy, the need for goods and services will grow that spur demand for banking credits, according to Mirza.

"We see signals of higher economic growth as commodity prices increase," Mirza said at the bank headquarters.

Rebound of global oil prices has spurred rising of prices and demand of commodities, the major exported products from Indonesia.

Mirza projected the Southeast Asia's biggest economy to expand 5.1 to 5.5 percent next year, compared with this year's target of 5.2 percent.

For this year, the financial services authority (OJK) has revised down loan growth target from 7 to 9 percent to 6 to 8 percent.

The central bank has aggressively applied easing policy to spur loan growth, amid improving current account deficit and subdued inflation, in a bid to help accelerate the country's GDP growth.

The bank has cut its key rate by a total 150 basis points in six cuts this year with the latest reduction of 25 basis points on Thursday, bringing the seven-day reverse repo rate to 4.75 percent.

Expectation on a strong inflow of capitals into Indonesia amid improving fiscal condition is expected to counter the prospect of the U.S. Fed. Reserve's tight monetary policy in months to come. Endit