Growth in loans and advances by Singapore banks continue their vertical climb out of the low level seen in October 2009. Annual growth rate accelerated to 27.8% in July from 26.2% in June. Banks are still lending to businesses for building and construction and to individuals for housing. This is not good news. This late-cycle surge will lead to a bad hangover for Singapore banks and for businesses in 2012, not to mention the excess supply of office and residential buildings that would follow in its wake.
For now, this signals that monetary conditions are too loose in Singapore. Of course, there is little that Singapore can do, except to use moral suasion on banks, given its open capital account and its keenness to develop the island-state as a global centre for private banking and financial services. Full story
