Thailand’s household debt surged to 90.6% of GDP

Household debt in Thailand has reached 16 trillion baht in the first quarter of this year, accounting for 90.6% of the country’s GDP.

This increase is due to both higher levels of debt and a redefinition of national household debt, which now includes student loans, agricultural cooperative loans, housing loans, and microfinance.

Key Takeaways

• Household debt in Thailand has surged to 90.6% of GDP, reaching 16 trillion baht in the first quarter of this year.
• The Bank of Thailand’s new definition of household debt includes a broader range of loans, such as student loans and microfinance, contributing to the increase in debt levels.
• The high household debt in Thailand is likely to lead to an increase in non-performing loans, particularly in the automotive sector

The rise in household debt is primarily due to real estate purchases and personal loans.

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Rising interest rates and debt will put pressure on household consumption, particularly among low-income earners. Vulnerable households may struggle to repay debt with higher interest rates.

The automotive sector may see more non-performing loans, leading to car seizures as purchasing power decreases. The tourism industry, especially outbound tours, will be affected by high household debt as budget travelers may pause or choose domestic travel instead.

As the household debt in Thailand continues to rise, the government is taking measures to address the potential consequences. Efforts are being made to enhance financial education and promote responsible borrowing practices among individuals.

In recent years, the country’s household debt has experienced a significant increase, rising from 59.3% of GDP in 2010 to 89.7% in 2020. This trend has continued to peak at 90.2% in 2021, which can be largely attributed to the impact of the pandemic. It is important for policymakers and individuals alike to take steps towards managing their finances and reducing debt in order to ensure long-term financial stability.

The Bank of Thailand has set a goal to align the household debt-to-GDP ratio with the Bank for International Settlements standard by limiting it to a maximum of 80%. This move aims to promote financial stability and prevent households from taking on excessive debt.

It is crucial for Thai households to manage their debt effectively to avoid financial instability. Seeking financial advice and exploring debt consolidation options can provide individuals with the opportunity to reduce their debt burden and streamline their repayment process.