Rehab spending will boost GDP next year: CIMB

Malaysia-based CIMB Group is confident the Thai economy will grow healthily in 2012 provided the government injects substantially more funds to get things moving as soon as the flood waters have subsided.

Subhak Siwaraksa, president and chief executive officer of CIMB Thai Bank, said yesterday that the group expects to see Thai growth accelerate in the second quarter next year. This would help boost growth in lending by commercial banks including CIMB Thai, which expects lending in 2012 to grow by at least 20 per cent.

CIMB Thai saw loan growth of 20 per cent in the first nine months this year, outpacing last year’s growth rate.

Subhak said CIMB Group expected CIMB Thai to grow by at least 25 per cent this year.

“However, we have to evaluate the effect of flooding in the last quarter before finalising the loan-growth [estimate].” 

He said flooding was not likely to have a major effect on lending. Existing corporate customers are seeking loans for employees affected by the flooding, so demand for loans is expected to rise in the current quarter, he said.

The bank has more than 100 customers at flood-affected industrial estates. However, of the initial 40 customers the bank surveyed, about 50 per cent said they wanted financial assistance, he said. 

Subhak said the flood situation was expected to return to normal at the end of the first quarter next year, and that the effects of the huge rehabilitation budget planned by the government will be seen in the Thai economy in the second quarter. 

Rehabilitation spending is expected to add 1 percentage point to growth in gross domestic product next year, taking it to between 4.5 and 5 per cent, he said.

Subhak added that year-on-year growth in non-performing loans in 2012 should be stable at 3 per cent.