Thailand's Household Debt Reaches Record High, Posing Economic Concerns
Thailand's average household debt has hit a record high, with slow economic growth, lower incomes, and high living costs contributing to the problem. According to a survey by the University of the Thai Chamber of Commerce, the average debt per household is now 606,378 baht ($17,908), up 8.4% from the previous year. This is the highest level of debt since the survey began in 2009.
The country's household debt, which stands at 16.4 trillion baht ($484 billion) or 90.8% of GDP, is among the highest in Asia. This has had a negative impact on Thailand's economy, which has been struggling with high borrowing costs and weak exports.
The survey found that a majority of respondents had difficulty servicing their debts over the past year and are expected to face the same problem in the coming year. Informal loans make up 30% of the average debt, up from about 20% in 2023, as banks have tightened credit.
Lower-income families, unable to access bank loans, often turn to illegal loan sharks, trapping themselves in debt with high interest rates. This has led to a decrease in domestic vehicle sales, as high household debt and tighter lending rules are affecting consumer demand.
The government has recognized the urgency of addressing the country's debt problems. Finance Minister Pichai Chunhavajira has called for assistance to retail borrowers, and the new Prime Minister Paetongtarn Shinawatra has pledged to stimulate the economy immediately.
To support vulnerable groups, the government announced that it will distribute 145 billion baht ($4.3 billion) as part of its "digital wallet" stimulus program this month, ahead of schedule.
In conclusion, Thailand's rising household debt poses significant challenges to the country's economy and its citizens. It is crucial for policymakers to implement measures to address this issue and provide support to those struggling with debt. By taking action now, Thailand can work towards a more sustainable financial future for all its residents.