Banks in the Philippines have increased lending by 1% since the start of the Covid-19 pandemic to help businesses survive- bucking a global trend of increased loans to businesses.

Our new study shows the Philippines added USD 2 billion in loans to business.

In comparison, banks worldwide increased overall lending to businesses by 10%, adding an additional USD3.3trillion in the last twelve months alone, as governments flood lending markets with money to help businesses through pandemic disruption.

Our study found that BRIC countries experienced a particularly large increase in bank lending in the last year – a 12% increase on average.

BRIC countries outpaced the G7 (9% growth in lending on average), as countries such as Canada saw a decrease in total lending to businesses through the pandemic (-0.3%). Whereas the eight major EU economies in our study are lagging behind other world economies in increasing lending, adding only 5% to outstanding bank lending last year.

Much of the growth in bank lending to businesses has been driven by Government-backed Covid loan schemes.

Low-cost lending has been crucial in supporting businesses through the economic disruption caused by the pandemic. Having a scheme in place which also has attractive repayment terms gives more confidence to SMEs to take out loans, if businesses are too nervous to borrow that is rapidly going to weight on the economy.

The vaccine rollout provides a light at the end of the tunnel. With little certainty on when businesses can return to ‘normal’ operating levels, [country] needs to provide as much support as possible to ensure businesses stay afloat until then.