Thai household debt eases slightly as loan growth cools on curbs

Nationwide household debt calculated as a percentage of the gross domestic product was 89.6 per cent in the three months through June, down from 90.7 per cent in the preceding quarter. PHOTO: BLOOMBERG

Published Mon, Sep 30, 2024 · 05:40 PM

THAILAND’S household debt fell marginally in the second quarter as banks tightened lending to control bad loans and borrowers accelerated debt repayment amid the highest interest rate in a decade.

Nationwide household debt calculated as a percentage of the gross domestic product was 89.6 per cent in the three months through June, down from 90.7 per cent in the preceding quarter, according to data released by the Bank of Thailand on Monday (Sep 30). The liability totalled 16.32 trillion baht (S$649 billion), down from 16.36 trillion baht in the first quarter.

More than 75 per cent of the household debt pile was made up of loans for personal consumption and mortgages, BOT data showed.

Prime Minister Paetongtarn Shinawatra has pledged a sweeping debt restructuring to tackle the household indebtedness as her new administration unveils measures to prop up Thailand’s sluggish economy. The highest household debt in South-east Asia has been cited by the central bank among reasons to keep interest rate at 2.5 per cent, the highest since 2013.

Thailand’s household debt has soared almost 20 per cent since 2019 as the US$500 billion economy struggled to shake off the impact of the Covid pandemic. Paetongtarn’s government is giving 10,000 baht each in cash to about 14.5 million poor and disabled to help them cope with the cost of living.

The slight decline in the debt ratio was the result of loan repayment and slowing credit growth at commercial banks, Bank of Thailand’s Assistant governor Chayawadee Chai-Anant told reporters. A 2.3 per cent GDP growth in the second quarter also helped narrow the debt ratio, she said.

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Thai banks have turned cautious in granting new loans, especially to finance automobile purchases, due to rising defaults. New loan growth slowed to 0.3 per cent in the second quarter from 1.3 per cent in the preceding three months, according to BOT, which last month predicted a further increase in non-performing loans as small businesses and individual borrowers struggle to meet repayment obligations. BLOOMBERG

Thailand

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