Thailand’s household debt dropped to its lowest level since early 2020, driven by stricter lending standards and government initiatives aimed at alleviating financial burdens for millions of borrowers.
According to data released by the Bank of Thailand on Monday, the household debt-to-GDP ratio stood at 87.4% in the first quarter, slightly down from 88.4% at the end of last year. The country’s 3.1% economic growth in the January-March quarter also contributed to reducing the debt relative to GDP, stated Bank of Thailand Senior Director Pranee Sutthasri.
In nominal terms, household debt slightly declined to 16.35 trillion baht ($503 billion) by the end of March, compared to 16.4 trillion baht three months earlier.
Thailand maintains the highest household debt-to-GDP ratio in Southeast Asia, which remains a significant hurdle to the country’s economic growth, preventing it from keeping pace with neighboring economies. Last year, Prime Minister Paetongtarn Shinawatra’s government announced debt-relief measures targeting approximately 1.9 million borrowers with a total debt of 890 billion baht.
While the majority of household loans are in the personal consumption segment, cautious commercial banks have tightened their lending criteria for auto loans and other consumer credit. Consequently, the overall bank loan portfolio shrank for the third straight quarter during January-March.
Amid ongoing political instability and rising non-performing loans, Thai banks—already burdened by weak lending activity—may face heightened profit vulnerabilities from US tariffs compared to their Southeast Asian counterparts, according to senior analyst Sarah Jane Mahmud of Bloomberg Intelligence.
Despite an average 25% exposure to trade-related sectors, Thailand’s economy is more dependent on US trade, with exports to the US rising by 89% from 2019 to 2024 and now representing 18% of total exports, Mahmud noted in a recent analysis.