Around $14b worth of construction projects will break ground this year.
Thai banks are expected to extend their positive lending momenum following a boost from the government’s massive infrastructure drive which could boost loan growth from 3.8% in 2017 to 5% in 2018, according to Fitch Solutions.
Out of the planned $80.96b (THB2.7t) worth of projects under the Transport Action plan, around $14b (THB1t) has already started or will begin construction in 2018 which could spur demand for credit.
The government has already implemented tax incentives for R&D for the Eastern Economic Corridor project which aims to develop the three eastern provinces of Chonburi, Rayong and Chachoengsao into a thriving economic zone.
“Loans grew by an average of 4.9% y-o-y in the first five months of 2018, accelerating from an average of 2.8% y-o-y for the same period in 2017 and we expect this upswing to continue over the coming quarters,” Fitch Solutions said in a report.
Steadily growing household loans is also expected to lend support to Thai banks’ overall lending.
Household loans has been on a steady uptrend for the past three quarters after posting the fastest growth since Q1 2016 with Fitch Solutions expecting the positive momentum to extend up to the second half of 2018 amidst improvements in household debt to GDP ratio.
“We expect consumer confidence to remain on a broad uptrend, which began in July 2017, as the ongoing economic recovery continues to feed through, and this will likely be positive for consumer credit demand.”
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