Thai household debt at record high amid sluggish economy, survey shows

BANGKOK: Thailand’s average household debt has reached a record high due to slow economic growth, lower incomes and high living costs, and people are having trouble servicing their loans, a university survey showed on Tuesday (Sep 10).
The average debt per household was 606,378 baht (US$17,908), up 8.4 per cent from the previous year, according to the survey by the University of the Thai Chamber of Commerce conducted in early September. It was the highest average debt level since the survey began in 2009.
The debt has weighed on Southeast Asia’s second-largest economy. Growth has lagged regional peers as it also faces decade-high borrowing costs and weak exports amid a slow recovery in top trading partner China.
The government and central bank have expressed concerns over the country’s household debt of 16.4 trillion baht (US$484 billion), or 90.8 per cent of gross domestic product (GDP) at the end of March 2024, among the highest in Asia.
International Monetary Fund data for 2022 shows household debt at 66.9 per cent of GDP for Malaysia and 48.6 per cent for Singapore.
The survey of 1,300 people during Sep 1-7 found a majority of respondents had problems with debt servicing over the past year and would face the same problem over the next year.
“We’ve faced debt problems for a long time and we can’t solve anything,” university president Thanavath Phonvichai told a briefing.
Of the average debt, 30 per cent was informal loans, up from about 20 per cent in 2023 as banks have tightened credit, Thanavath said.
The use of illegal loan sharks is rife among lower-income families who are unable to get bank loans, with many people trapped by debt with high interest rates.
The Federation of Thai Industries has cut its domestic vehicle sales target for this year by 200,000 units to 550,000, saying that high household debt and tighter lending rules were hitting demand.
Finance Minister Pichai Chunhavajira has said there is an urgent need to fix debt problems. He has said the central bank should assist retail borrowers, and that he will talk with banks about providing further assistance to debtors.
New Prime Minister Paetongtarn Shinawatra, who took office last month, has promised to stimulate the economy right away.
The government said on Monday it would distribute 145 billion baht (US$4.3 billion) of its “digital wallet” stimulus programme this month, earlier than scheduled, to support vulnerable groups.