Southeast Asian countries' credit growth diverges

Thailand has been hit with weak economic growth, whilst

Credit growth in Southeast Asian countries have diverged in recent months, with Thailand in the red, Indonesia slowing down, whilst the Philippines saw a major rise.

Thai loan growth has been hit by weak economic activity and rising bad loans. This has led its banks to tighten credit standards, according to Nomura Global Markets Research on 14 February 2025.

This, in turn, is generating a negative feedback loop, whilst the Thai central bank has kept its monetary stance restrictive all along.

Indonesia’s softening credit growth, meanwhile, is consistent with weak domestic demand and reflects in part Bank Indonesia’s constraints.

In contrast, in the Philippines, its central bank has already cut the policy rate by a total of 75 basis points (bp) since August and doubled down on easing via a 250bp RRR cut in October. This has reportedly helped improve monetary transmission, Nomura said.

“We continue to think countries that deliver effective policy support will be more resilient to external risks, like Malaysia and the Philippines,” Nomura said.

Thailand is expected to continue to struggle, given its domestic structural fragilities and a higher exposure to US tariff risks, ultimately forcing the Bank of Thailand (BOT) to cut rates, it added.