Thailand’s average household debt has surged to a record high of 606,378 baht, marking an 8.4% increase from the previous year. This sharp rise has been attributed to sluggish economic growth, declining incomes, and rising living costs.
The Center for Economic and Business Forecasting at the University of the Thai Chamber of Commerce reports that household debt in Thailand is at its highest level in 16 years. A recent survey of 1,300 individuals revealed that nearly all households (99.7%) are in debt, with a significant portion categorized as formal debt.
Concerns over rising household debt are mounting, with both the government and the central bank highlighting the need for urgent intervention. The finance minister has underscored the necessity of addressing and supporting retail borrowers. The increase in informal loans, which now constitute 30% of the average debt, indicates that banks have tightened credit, pushing lower-income families toward high-interest informal lenders.
Debt Servicing Challenges The survey also highlighted widespread difficulties in servicing loans, with many respondents having struggled with debt repayment over the past year and anticipating continued challenges. In response, the government has announced a plan to distribute 145 billion baht ($4.3 billion) to state welfare cardholders in a bid to stimulate the economy and alleviate debt pressures.
Economic Impact As of March 2024, household debt in Thailand equates to 90.8% of the country’s Nominal GDP, a slight decrease from the previous quarter’s 91.4%. This ratio is a critical indicator of the financial health and spending power of Thai families.
The increasing debt burden is attributed to several factors, including the expansion of consumer credit, rising property prices, and a general increase in the cost of living. Cultural factors, such as the tradition of supporting extended family members, also contribute to the growing debt levels.
Historical Trends The average household debt stood at 501,711 baht in 2022, reflecting a 3.7% increase from 483,950 baht in 2020. A July 2023 survey reported an even higher average debt of 559,408.7 baht, the highest in 15 years. These figures underscore the mounting financial strain on Thai families.
The Bank of Thailand and other financial institutions are actively monitoring these trends and implementing measures to ensure financial stability. Efforts are focused on creating a sustainable economic environment that balances growth with the financial security of Thai households.
In addition to the digital wallet stimulus program, Prime Minister Paetongtarn Shinawatra is spearheading initiatives to provide immediate relief to vulnerable groups and ease debt pressures.
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