Thailand is facing a severe crisis of high household debt, causing bankruptcy, crime, suicides, and mental health breakdowns among its citizens, significantly impacting society in a negative manner.
The escalation of the high household debt crisis in Thailand has become a pressing social concern, with over a million individuals on the verge of bankruptcy. This has led to devastating outcomes, including cases of suicide, criminal activities, and widespread mental health issues. The household debt-to-GDP ratio surged from 60% in 2010 to 90% due to the COVID-19 pandemic in 2020, currently lingering at a critical 91%.
The adverse social effects of mounting household debt are starkly visible in stories of individuals resorting to extreme measures due to their inability to break free from the debt cycle.
To address this crisis, the Bank of Thailand has introduced responsible lending guidelines for banks, urging them to provide debt-restructuring options to borrowers before their debts turn delinquent. State-owned banks are also playing a role in extending assistance to borrowers. However, concerns have been raised by critics regarding potential financial ramifications and the risks associated with turning to loan sharks offering high-interest loans.
Factors contributing to the escalating household debt crisis include low-interest rates, which have incentivized higher borrowing, exacerbated by the influence of social media influencers encouraging excessive spending.
The government is focusing on leveraging state-owned banks to support borrowers and combat the rise of bad debts. Despite some positive indicators such as employment growth, reducing household debt to a sustainable level remains an arduous and intricate task, given the multifaceted nature of the crisis and the varied strategies being deployed to address it.
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