Thai Q3 household debt to GDP slows but remains a risk

THAILAND’S household debt to gross domestic product ratio dropped to 86.8 per cent in the third quarter from 88.1 per cent in the previous quarter, central bank data showed on Friday (Dec 30), as the economy continued to recover.

The ratio was still among Asia’s highest, however, and the amount of debt increased to 14.9 trillion baht (S$579.3 billion) at the end of September from 14.76 trillion baht at the end of June.

The high level of household debt could disrupt the economic recovery and needed to be brought down to sustainable levels, Bank of Thailand (BOT) Governor Sethaput Suthiwartnarueput said earlier this month.

The high debt was one reason why the BOT has not increased interest rates aggressively while the economic recovery was slow and had yet to return to the pre-Covid 19 period, Sethaput told the BOT’s magazine.

The BOT has raised its key rate by a total 75 basis points since August to 1.25 per cent to curb inflation and ensure the recovery continues. It will next review policy on Jan 25, when most economists expect a further gradual rate hike.

Growth in South-east Asia’s second-largest economy has lagged behind peers as its vital tourism sector has just started to rebound this year.

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The BOT forecast growth of 3.2 per cent this year and 3.7 per cent in 2023. Last year’s growth of 1.5 per cent was among the slowest in the region. REUTERS