The average household debt in Thailand has reached a record high, increasing by 8.4% from the previous year due to slow economic growth, lower incomes, and high living costs.
- Average household debt in Thailand has reached a record high of 606,378 baht, up 8.4% from the previous year, causing significant financial strain for many families.
- The use of informal loans has increased to 30%, indicating that banks have tightened credit and pushed lower-income families towards high-interest illegal loan sharks.
- Both the government and central bank have expressed concerns over the country’s household debt, with the finance minister emphasizing the urgent need to address and assist retail borrowers.
The Center for Economic and Business Forecasting at the University of the Thai Chamber of Commerce reported that household debt in Thailand is at its highest level in 16 years, with an average of over 606,000 baht. The survey of 1,300 people found that almost all households (99.7%) carry debt, with most of it categorized as formal debt.
A survey showed that people are struggling to service their loans, with 30% of the average debt being from informal loans. The government and central bank have expressed concerns over the high level of household debt, which is among the highest in Asia.
Problems with debt servicing
The survey also revealed that a majority of respondents had experienced problems with debt servicing in the past year and expected to face the same issue in the next year. The government has announced plans to distribute 145 billion baht to state welfare cardholders as part of an effort to stimulate the economy.
Thailand’s economic landscape has been significantly shaped by the levels of household debt. As of March 2024, household debt in Thailand accounted for 90.8% of the country’s Nominal GDP. This figure represents a slight decrease from the previous quarter’s ratio of 91.4%. The trend in household debt as a percentage of GDP has been a critical indicator of the financial health and spending power of Thai families.
The growing financial burden on Thai families
Surveys have shed light on the average debt per household, which stood at 501,711 baht in 2022, marking a 3.7% increase from 483,950 baht in 2020. Another survey from July 2023 reported an even higher average household debt of 559,408.7 baht, the highest level in 15 years. These figures highlight the growing financial burden on Thai families.
The reasons behind this surge in household debt are multifaceted. They include the expansion of consumer credit, the rise in property prices, and the general increase in the cost of living. Additionally, cultural factors, such as the tradition of supporting extended family members, also play a role.
The Bank of Thailand and other financial institutions are closely monitoring these trends and implementing measures to ensure financial stability and support for indebted households. The focus is on creating a sustainable economic environment where growth does not come at the expense of financial security for the average Thai family.
Prime Minister Paetongtarn Shinawatra has announced a 145 billion baht ($4.3 billion) digital wallet stimulus program aimed at assisting vulnerable groups by alleviating immediate debt pressures.
