A recent survey revealed that household debt in Thailand is expected to reach its highest level in 16 years. This increase in debt is due to the economic disparities caused by the pandemic, which have impacted family incomes.
According to a survey conducted by the University of Thailand Chamber of Commerce, family debt is projected to rise by 8.4% to over 600,000 baht, which is nearly $18,000. This surge in debt is anticipated to occur this year, marking the highest level of household debt since the survey began in 2009.
The study, which gathered responses from 1,300 participants between September 1st and 7th, revealed that family obligations amount to over 16 trillion baht, almost 91% of the country’s GDP. The newly appointed Prime Minister Paetongtarn Shinawatra, is expected to address this issue by implementing measures to reduce household debt. She’s planning to unveil a comprehensive debt restructuring plan as a top priority in her government’s policy statement on Sept. 12.
This survey revealed that many people are struggling to keep up with their loan payments, with 30% of the average debt coming from informal loans. The surveys also shed light on the average debt per household, which was 501,711 baht in 2022 – a 3.7% increase from 2020’s 483,950 baht. A more recent survey from July 2023 reported an even higher average household debt of 559,408.7 baht, the highest in 15 years. These numbers show just how much of a financial strain Thai families are under.
The President of University of Thai chamber of commerce emphasized that the high level of household debt is deterring investors and hindering future consumption and growth. However, he expressed optimism that the government’s planned stimulus measures, such as cash distribution, will help boost economic growth and stabilize the household debt to GDP ratio.
There are several reasons behind this surge in household debt, including the easy availability of consumer credit, soaring property prices, and the overall rising cost of living. Cultural factors, like the tradition of financially supporting extended family members, also contribute to the problem.
Currently, formal debt accounts for over 70% of household liabilities, with the remaining borrowings coming from informal sources. Tats, a financial expert, estimates that unofficial debt may make up 10% to 20% of the country’s GDP.
