Households de-leveraging continues, even if there are some early signs that household loan growth might be stabilizing circa 6% (YoY). The loan-to-deposit ratio (LDR) also looks to have stabilized right now, just below 110%. From the authorities' perspective, there is probably less concern on the household sector now compared to 2011-12, when the LDR was above 120% and household loan growth close to 20% per year.
But it also mean there is barely any support for overall GDP growth from consumption growth. Into next year, GDP growth momentum is still largely dependent on a ramp-up in public sector investment. The government seems willing to sustain a supportive stance for now and, more importantly, fiscal disbursement has been on track.
An upswing in private consumption will be a plus. At least for now, a significant improvement in private consumption growth appears unlikely. Stronger income growth will be helpful, if we were to expect private consumption growth to trend above 3% once again. But nominal wage growth is practically zero at present. Even if the government's stimulus efforts will clearly be a boost, expect the impact to be lagged. 4% GDP growth remains some distance away.
