The Viewpoint: Three Reasons Why Credit Growth is Booming

Research evidence excerpt

The Viewpoint: Three Reasons Why Credit Growth is Booming

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July 21, 2026 06:58 PM GMT

Morgan Stanley Asia LimitedMAsia Economics | Asia Pacific Chetan Ahya

Chief Asia Economist

The Viewpoint: Three Reasons Chetan.Ahya@morganstanley.comMorgan Stanley Asia (Singapore) Pte. +852 2239-7812

Derrick Y Kam

Asia EconomistWhy Credit Growth is Booming Derrick.Kam@morganstanley.com +65 6834-8272

Bank credit growth in Asia ex China has picked up to its Morgan Stanley Asia Limited

Jonathan Cheung

Economist strongest in 18 years. Surging capex, booming trade and the rise

Jonathan.Cheung@morganstanley.com +852 2848-5652

in PPI inflation explain this acceleration in credit demand. We

Kelly Wang

expect the capex super-cycle to sustain the strength in credit Economist

Kelly.Wang@morganstanley.com +852 3963-0891

growth.

Morgan Stanley India Company Private Limited

Sudhanshu Agarwal

Key Takeaways Economist

Sudhanshu.Agarwal@morganstanley.com +91 22 6995-4568

Asia ex China’s credit growth has accelerated to 8.5%Y, the highest in 18 years.

Meanwhile China, with its counter-cyclical growth model, is slowing leverage.

With the region’s growth being driven by capex and exports, corporate sector

loan growth is the main driver for overall credit growth acceleration.

PPI inflation and nominal industrial production growth have also risen to the

highest levels since the 2000s, adding to corporate credit demand.

As non-tech capex and non-tech exports are now picking up, improving labour

market conditions are lifting household loan growth as well.

As the capex super-cycle continues, we see Asia ex-China bank credit growth

staying strong.

In this report, we delve into which segments and geographies are driving stronger

credit growth in Asia ex China.