In the first quarter of this year, household debt in Thailand hit 16 trillion baht, or 90.6% of the nation’s GDP. Both greater debt levels and a new definition of national household debt—which now includes school loans, loans from agricultural cooperatives, mortgages, and microloans—are to blame for this rise.
Main Points
In Thailand, household debt has risen sharply to 90.6% of GDP, amounting to 16 trillion baht in the first three months of this year.
According to the Bank of Thailand’s revised definition, a wider range of loans, including student loans and microloans, contribute to rising debt levels.
Due to Thailand’s high levels of household debt, there will probably be more non-performing loans, especially in the automotive industry.
Personal loans and real estate purchases are the main causes of the increase in household debt.
Debt and rising interest rates will put pressure on household consumption, especially for those with low incomes. Higher interest debt repayment costs may be difficult for households in vulnerable situations.
More non-performing loans could affect the automobile industry, which could result in car seizures as people’s purchasing power declines. High household debt will have an impact on the tourism business, especially outbound trips, as budget tourists may decide to postpone or choose for domestic travel instead.
The government is taking action to address the potential repercussions as family debt in Thailand keeps increasing. There are initiatives underway to improve financial literacy and encourage prudent borrowing habits among people.
Household debt in the nation has significantly increased recently, going from 59.3% of GDP in 2010 to 89.7% in 2020. This pattern has persisted, reaching a peak in 2021 of 90.2%, which is mostly due to the pandemic’s effects. To maintain long-term financial stability, it is crucial for both individuals and policymakers to take action toward debt reduction and money management.
By keeping it at no more than 80%, the Bank of Thailand hopes to bring the household debt-to-GDP ratio into compliance with BIS guidelines. This action tries to encourage monetary stability and discourage excessive household debt.
Thai households must successfully manage their debt if they are to prevent financial upheaval. People have the chance to lessen their debt load and expedite their repayment procedure by seeking financial counsel and looking into debt consolidation solutions.
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