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Thai household debt surges, reaching a 16-year climax

Thai household debt surges, reaching a 16-year climax

BANGKOK: Thai households are dealing with the highest level of debt in 16 years thanks to prolonged COVID-19 outbreaks and slow economic growth, according to the latest survey by the University of the Thai Chamber of Commerce (UTCC).

economics
By Bangkok Post

Friday 26 August 2022, 10:44AM


Some 99.6% of respondents are in debt, incurred mainly from personal loans and credit cards as their income stagnated while expenses increased, driven by higher costs of living, said UTCC President Mr Thanavath. Photo: Phuket Commerce Office

Some 99.6% of respondents are in debt, incurred mainly from personal loans and credit cards as their income stagnated while expenses increased, driven by higher costs of living, said UTCC President Mr Thanavath. Photo: Phuket Commerce Office

The survey, which was based on interviews with 1,350 respondents conducted during Aug 15-20, deemed Thailand’s household debt situation as not yet serious because rising debts stem largely from asset purchases, reports the Bangkok Post.

According to the survey, the average debt per household stands at B501,711 this year, up by 3.7% from B483,950 in 2020.

The figures represented the highest level in the 16 years the survey has been conducted. There was no survey in 2021.

“Some 99.6% of respondents were in debt, which was incurred mainly from personal loans and credit cards as their income stagnated while expenses increased, driven by higher costs of living,” said Thanavath Phonvichai, president of the UTCC.

“People’s borrowing objectives were for daily expenses, purchases of durable goods such as houses and vehicles, and doing business.”

According to Mr Thanavath, despite the rising household debt rate hitting a 16-year high, most household debts were formal or organised, reflecting that Thais remain capable of borrowing from financial institutions.

It is considered a normal condition for middle-income earners to borrow more to buy assets, he said.

“Now it’s time for the government and private sector to accelerate investments to boost economic growth, which should increase people’s income, in lieu of cash handouts,” said Mr Thanavath.

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“Household debt will improve once the domestic economy recovers to strong growth.”

He cited the latest data from the Bank of Thailand that revealed Thailand’s household debts totalled B14.6 trillion in the first quarter of this year, representing 89.2% of GDP, a slight decrease from the fourth quarter of 2021 when household debt stayed at 90.0% of GDP.

Thai household debt rose to 90.9% of GDP in the first quarter of 2021 because of the pandemic and the government’s lockdown measures in February of 2021 to contain the virus spread.

Mr Thanavath said Thailand’s household debt is likely to bottom out and gradually decrease in line with the economic recovery.

The ratio of household debt is projected to significantly drop over the next five years if the economy can expand by at least 6.2% per year, he said.

Mr Thanavath predicted the Thai economy to grow by at least 4% in the fourth quarter as a result of robust exports and a recovery in foreign tourist arrivals.

“Exports and tourism are key drivers to propel the country’s GDP to grow by 3-3.5% this year,” he said.

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Kurt | 26 August 2022 - 11:33:01

Mr Thanavath seems, thai belly staring, not to be aware of 'western' inflation, around 9%, sky rocketing ticket prices. Europe that faces 'energy poverty', and people have to think coming winter: 'Heat or eat'. ( that is during Thai high season) [yesterday article in BP]
 

Kurt | 26 August 2022 - 11:26:11

Not surprised. Easy to spend money you don't have ( loans, credit cards). At the end you have to pay really, or a very high interest! The government also is not helping to tackle this problem. To many extra nonsense sub holidays, just massaging people to be domestic tourist and spend money. Makes TAT figures happy, and your wallet empty.

 

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