It remains unclear how much of the reduction in NFL as a share of GDP reflected changes in bank behaviour and how much reflected lower demand for credit. Banks actively reduced reliance on offshore funding – particularly at short maturities12 – in order to reduce risk and respond to regulatory changes (such as the liquidity policy introduced by the Bank in 2010).
The economy has grown 3 percent over the past year, and there are good reasons to expect growth to remain solid next year, supported by the strong underlying momentum in domestic demand. Consumer spending looks to be robust going into the fourth quarter, and ongoing gains in income and employment provide positive fundamentals.