Many turning to loan sharks: TCC

The chamber yesterday revealed the results of a survey conducted from March 22-26 on household debt and the impact of the increase in the minimum wage that takes effect this weekend. The survey found that debt grew by 5.7 per cent year on year to Bt168,517 per household, while the ability to make debt payments averaged Bt10,978 per month, said Thanavath Phonvichai, director of the Economic and Business Forecasting Centre of the University of the Thai Chamber of Commerce.
The cost of living has exceeded consumers’ income, which has also reduced their savings. This has undermined consumer confidence.
“The respondents believe that the economy has not recovered in the first quarter of this year but [would do so] in the second half.” Thanavath said they also expressed worries on whether the Thai economy would recover in the future.
In addition, they expressed concern that government spending on mega-projects and infrastructure would raise the country’s public debt from the current level of 41 per cent of gross domestic product to 50 per cent.
Consumers’ incomes have not kept up with rising costs. The higher price of goods accounts for 60.2 per cent of this shortfall, rising interest rates 18.5 per cent, soaring fuel prices 10.3 per cent and unexpected factors 10 per cent, the survey found. As a result, people have to use more their savings to hold down debt.
The survey also found that 30.1 per cent of low-income people, mainly those earning Bt10,000 per month or less, had borrowed from loan sharks. This group has high potential to borrow more and raise overall household debt.
Thanavath said rising household debt was not related to the flood crisis last year but mainly derived from the increasing cost of living.
Consumers believe that the minimum-wage increase will force up the price of goods. If the government had no measure to curb energy prices, the centre forecast that inflation would reach 4 per cent this year.