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Consumer confidence keeps falling as household debt soars
Consumer confidence index for August 2015 has fallen to its lowest point in a period of 15 months, according to the Thai Chamber of Commerce’s Business and Economic Forecast Center, meanwhile household debt rose 13% from last year average.
Thanawat Polvichai, the director of the Business and Economic Forecast Center, stated that the consumer confidence index (CCI) for the month of August 2015 fell to its lowest point in a period of 15 months since June 2014.
This represents an eight month consecutive drop and presently stands at 72.3 points.The CCI figure for July 2015 stood at 73.4.
These figures indicate that consumers are still wary and cautious of the country’s overall economic situation.But he stated however that the economy is expected to rebound strongly by the middle of the fourth quarter as the general consensus is a strong confidence in the government’s new economic team which is headed by Somkid Jatusripitak who is also the deputy prime minister.
The results of a recent survey however show a worrying trend among consumers in that it shows a marked rise in household debt.
Household debt is reaching new peaks
Thai households have an average debt of 248,004 baht each this year which represents an increase of 13.16 percent of last year’s average of a 219,158 baht which is the highest in ten years, according to a poll result of the University of Thai Chamber of Commerce.
Mr Thanawat Pholvichai, director of the economic and business forecast centre of the UTCC, said Thursday that the poll result came from an opinion survey of 1,200 households during August 20-28.
Of the average household debt of 248,004 baht this year, 48.7 percent are organized debt and the rest are unorganized debt, said Mr Thanawat, pointing out that the increased household debt reflected the economic slowdown in the past three years which has affected household revenues.
He explained that the fact that households were indebted to unorganized lenders more than to organized lenders because they had limited access to organized source of funding.
The causes of increased household debts range from lower incomes, increased cost of living, poor farm harvests, increased spending through credit cards to increased tuition fees of their children, gambling and excessive spending on hire purchases.
The survey shows that 87.8 percent of the debtors have problem of debt servicing; average household debt repayment amounts to 14,033 baht per month, representing an increase of 5.06 percent from last year’s 10,752 baht.
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