Up to the end of November 2013, total outstanding credit in Indonesia’s banking sector reached IDR 3,244.7 trillion (USD $26.6 billion), a 18.0 percent increase (yoy) based on a fixed rupiah rate, down from a 19.4 percent growth rate (yoy) in October 2013.

Credit growth particularly slowed in the processing industry sector as well as the trade, hotel and restaurant sector. Both these sectors together account for 53 percent of total credit disbursements in Indonesia.

Despite Indonesia’s higher interest rate environment since mid-2013 (Bank Indonesia gradually raised its benchmark interest rate from 5.75 percent in June 2013 to 7.50 percent in November 2013), there are no signs yet of a general rise in non-performing loans (NPLs) in the country’s banking sector. The higher interest rate environment is caused by the country’s high inflation rate (8.38 percent in full-year 2013), wide current account deficit (around 3 percent of GDP at end-2013) and the ailing rupiah exchange rate (based on data from Bank Indonesia, the rupiah depreciated 20.8 percent against the US dollar last year).