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TUESDAY, September 27, 2022
Household debt increases Bt136 billion in second quarter

Household debt increases Bt136 billion in second quarter

SATURDAY, October 02, 2021

Thai household debt in the second quarter of 2021 recorded at 14.27 trillion baht, or 89.3 per cent of GDP, comparing to 14.14 trillion baht recorded in the first quarter, or 90.6 per cent of GDP, which was the highest point of household debt per GDP in the past 18 years, Kasikorn Research Centre revealed on Friday (October 1).

“Thai economy in the second quarter is expanding faster than household debt, with nominal GDP expanding at 10.7 per cent year on year, while the household debt in second quarter is expanding at 5 per cent year on year,” said the centre.

Kasikorn Research attributed the rise in household debt in second quarter to the increasing home loans by 156 billion baht and increasing debts from credit cards and personal loans, which are the preferred methods that Thai households use to increase their short-term liquidity.

“The latest wave of Covid-19 outbreak has accelerated the need for loans among Thai households, which can be seen from increasing number of customers applying for individual loans at commercial banks and other financial institutes from April onward,” said the Centre. “Statistics from the Bank of Thailand revealed that as of July 2021, up to 5.12 million accounts have requested loans amounted to 3.35 trillion baht from financial institutes, increasing from 4.77 million accounts recorded in April.”

As for the rest of 2021, Kasikorn Research estimated that the household debt per GDP will gradually increase and could reach 90 to 92 per cent of GDP by year end. “Although the easing up of lockdown measures, the reopening of the country and increased vaccination rate will improve economic situation and increase household income, but it is unlikely that the repayment capability of many debtors will be fully restored within this year,” added the centre.

The centre also revealed its survey results on preference in loan services among people in Bangkok and surrounding provinces, which found that most of respondents (50.4 per cent) wanted financial institutes to provide debt moratorium. 20.3 per cent wanted extension of repayment deadline, 16 per cent wanted reduced installment rate, and 9.8 per cent wanted debt restructuring programme.