Total household debt rose 4.6 per cent from last year to 14.1 trillion baht as incomes were hit by slow recovery from the Covid-19 crisis, the centre said.
It was also the biggest rise in five quarters, following higher borrowing from commercial banks (up 4.9%) and specialised financial institutions (5.5%), with the latter recording their highest level in five years.
The EIC estimates that the actual household debt situation may be worse than the debt-to-GDP ratio indicates since the household debt-to-income ratio tends to be higher than the debt-to-GDP figure.
The severe impact on households is reflected by the record number of unemployed and lost income for workers. In the first quarter of 2021, workers’ income dropped by 8.8 per cent from the same period last year, while nominal GDP dropped only 2.1 per cent.
While a strong export recovery is boosting the Thai economy, the export sector uses less labour compared to the service sector, the EIC said. Moreover, export income is concentrated in a small number of large companies.
Rising household debt and falling incomes mean people may turn to loan sharks and fall into a cycle of debt, said the centre. To prevent this, the government should offer financial relief and labour-skills training for households. Such measures were necessary as the household economy remains highly vulnerable, it added.
The EIC warned that “debt overhang” in the household sector will likely hamper spending and economic recovery in the foreseeable future.
Published : July 08, 2021
By : The Nation