The National Economic and Social Development Council (NESDC) is calling for measures to enhance debt restructuring efforts to prevent special mention (SM) loans from escalating into non-performing loans (NPLs), following a noticeable increase in SM loans during the final quarter of last year.
During a briefing on the social landscape for the first quarter of 2025, NESDC Secretary-General Danucha Pichayanan stated that household debt reached 16.4 trillion baht in Q4 2024, reflecting a modest growth of 0.2% compared to the same period last year. This slower growth was primarily driven by stricter lending standards, especially from commercial banks. Consequently, the household debt-to-GDP ratio declined slightly to 88.4%, down from 88.9% in the previous quarter.
The quality of household credit also showed signs of deterioration. The amount of personal loans overdue by more than 90 days (classified as NPLs) totaled 1.22 trillion baht, representing 8.94% of total credit—an increase from 8.78% in the prior quarter.
However, household debt categorized as SM loans, which are overdue by 30 to 90 days but not yet classified as NPLs, rose to 4.17% of total household debt from 3.52% in the third quarter. SM loans currently amount to 568 billion baht.
Mr. Danucha emphasized that the Bank of Thailand’s “You Fight, We Help” debt relief program aims to prevent loans from turning into NPLs. He highlighted the need for increased public awareness to encourage struggling borrowers to participate in the program and for improved terms that assist borrowers showing early signs of repayment difficulties.
He also pointed out that excessive consumption of luxury goods and premium services may contribute to debt issues, citing a Mahidol University survey indicating that one in three Thais prefer spending on luxury items, increasing their debt vulnerability.
Another concern is the push for cooperatives to join the Credit Bureau, which could help individuals access fairer credit and better manage their debts.
Unemployment and Employment Issues
Thailand’s unemployment rate in the first quarter of 2025 stood at 0.88%, or roughly 360,000 people, which is lower than 1.01% in the same period last year. Conversely, the number of “quasi-unemployed” individuals—those working fewer than 20 hours weekly in agriculture or fewer than 24 hours in other sectors—increased by 14.6% year-on-year, surpassing 4.3 million.
Mr. Danucha attributed the rise in unemployment to economic downturns that heavily impacted small and medium-sized enterprises (SMEs), with around 24,000 SMEs closing in 2024.
Key Issues for Ongoing Monitoring
He identified three critical areas for close monitoring:
- Promoting Innovation and Technology Adoption in SMEs: A World Bank report indicates that Thai SMEs utilize innovation less frequently than their regional counterparts, affecting competitiveness and risking closures. Encouraging these firms to access funding for adopting new technologies is essential.
- Worker Severance Protection: Despite the Labor Protection Act (1998) requiring employers to pay severance based on years of service, many workers—especially those in foreign-owned companies—have not received their rightful compensation. Developing clear measures to ensure proper employee entitlements is necessary.
- Unemployment Risk Among New Graduates: Surveys show over 89% of industry leaders hesitate to hire recent graduates, citing lack of experience, skills, and professionalism. Many companies prefer freelancers, retirees, or leave positions unfilled. Enhancing skills training and adapting educational methods are urgent to better prepare graduates for the workforce.
