Bank lending trends for the fourth quarter are expected to pick up strongly, as companies boost production and rebuild inventories in light of the improving global economy, according to the Bank of Thailand.
Bandid Nijathaworn, a deputy central bank governor, said outstanding credit in the financial system fell by 212 billion baht or 3.68% year-on-year for the first seven months of the year.
But preliminary data for August show that demand for credit is picking up,particularly for working capital.
"If the recovery can be sustained,then it will help boost credit demand.For the first half, outstanding credit fell 3% year-on-year, but now we have flat growth," Dr Bandid said.
"On a month-to-month basis, we should see positive credit growth, although figures remain negative yearon-year."
Demand in the fourth quarter should continue to increase thanks to seasonal factors, industry restocking and higher spending and investment by the public sector.
Dr Bandid said market liquidity remained plentiful and would not be a constraint for loan growth. Economic uncertainties, both for Thailand and the global economy, remained the largest constraint for bankers.
The central bank met with representatives of local banks yesterday to discuss economic trends, as well as new relaxed terms by the Small Industry Credit Guarantee Corp for small business loans.
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