Thai household debt at 15-year high as economic recovery slows

THAILAND’S average household debt has reached a 15-year high due to a slower-than-expected economic recovery and high living costs, amid uncertainty over the formation of a new government after May elections, a survey showed on Thursday (Jul 27).

Average debt stood at US$16,438.70 in 2023, up 11.5 per cent from the previous year, according to the survey by the University of the Thai Chamber of Commerce.

The recovery of South-east Asia’s second-largest economy has lagged others in the region as its vital tourism sector just started to recover last year from the pandemic, while soft global demand continues to crimp exports.

Survey respondents thought they would continue to borrow more for at least six months, university president Thanavath Phonvichai told a briefing.

“The debt levels should peak in 2024,” he said. “Despite the election, the economic recovery remains unclear, meaning people continue to face economic problems with high living costs and low incomes until early next year”.

The Parliament on Tuesday postponed a vote for the next prime minister, delaying the formation of a government and policies to boost the economy.

SEE ALSO

Thailand unveils measures to trim US$469 billion household debt

DECODING ASIA

Navigate Asia in
a new global order

Get the insights delivered to your inbox.

The economy is expected to grow 3.0 per cent to 3.5 per cent this year, Thanavath said, adding the delayed government formation would have more impact on growth next year.

The ratio of household debt to gross domestic product (GDP) stood at 90.6 per cent at the end of March. Policymakers have expressed concerns about the high debt, particularly among low-income earners.

“We still need to monitor the debt service ability of vulnerable groups after signs of deteriorating credit quality, especially low-income earners,” the central bank said in a report on Thursday. REUTERS