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Thailand household debt could soar beyond 80 per cent of GDP

Christian Fernsby ▼ | June 16, 2020
The coronavirus crisis has had a massive impact on household debt in Thailand and it is expected to rise to more than 80 per cent of gross domestic product (GDP), state think-tank National Economic and Social Development Council (NESDC) has warned.
GDP   Thailand
Thai household debt stood at 79.8 per cent of GDP in the first quarter of this year.

Topics: Thailand GDP

The pandemic resulted in businesses shutting down in addition to the drought already having hit households hard, leading to increased borrowing of money as incomes declined, said NESDC secretary-general Thosaporn Sirisumphand.

The economic impact will be severe in the second quarter, he predicted, as many businesses have laid off workers, or cut their employees’ salaries.

“The income shock led to continued expansion of consumer loans, growing 7.1 per cent, while the NESDC had predicted it should be less,” he said. Consumer loans expanded 7.5 per cent in the fourth quarter of last year.

While overall GDP value decreased to 15 trillion baht ($480 billion) this year from 16 trillion baht last year, combined with the income shock household debt is expected to surpass 80 per cent of GDP this year, he warned.

Consumers also used personal loans for doing businesses, estimated to be 17.9 per cent of total personal loans, which include hire purchase, auto loans and mortgage, he said. Taking this behaviour into account, household debts could be lower.

Non-performing loans arising from consumption loans is about 3.23 per cent of total consumption loans, up from 2.9 per cent in the fourth quarter of last year, he said. Bad debts amounted to 156 billion baht.

Thai household debt totalled 13.47 trillion baht in the fourth quarter of last year, up four per cent year-on-year, but down 5.5 per cent quarter-on-quarter. The debt-to-GDP ratio was 79.8 per cent, the highest in 14 quarters. It is expected to surpass 80 per cent of GDP this year.