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Thai household debt may rise to 90% of GDP

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Household debt in Thailand is likely to be in the range of 89.5 to 90.5 per cent of gross domestic product (GDP) in the first half of this year. PUBLIC DOMAIN

Thai household debt may rise to 90% of GDP

Household debt in Thailand is likely to hit nearly 90 per cent of gross domestic product (GDP) in the first half of the year, according to Siam Commercial Bank’s Economic Intelligence Centre (EIC).

The EIC estimates household debt to be in the range of 89.5 to 90.5 per cent of GDP, before gradually decreasing in the second half of the year when the impact of the Omicron virus variant decreases.

Household loan growth from the banking system in the third quarter slowed down in all major credit categories. However, personal loans continued to expand at a high level based on liquidity demand to offset the steep drop in income.

The problem of non-formal debt in the household sector tends to accelerate from households that need credit to pay for their expenses but have limited access to credit in the system. Most of them are already vulnerable low-income households, the EIC said.

The ratio of household debt to GDP in Thailand is likely to rise again within the first half of 2022. The main risk factor comes from the Omicron virus and how it will affect household income and increase loan demand.

This will challenge the process of repairing the balance sheet of the household sector and slow down the recovery of household finances, which will further affect household spending trends and credit quality, the EIC said.

Therefore, there must be government assistance measures for debt restructuring, income remedies, employment support, and labour reskilling programmes to increase the ability to earn money, including liquidity support measures to prevent informal debt problems, the EIC suggested.

The Bank of Thailand (BoT) said that Thai household debt, as of the third quarter of 2021, amounted to 14.3 trillion baht, representing a growth rate of 4.2 per cent year on year, decelerating from the previous quarter.

Meanwhile, the household debt-to-GDP ratio stood at 89.3 per cent, unchanged from the previous quarter, considered to be a high level, the BoT said.



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