Thai household debt-to-GDP ratio falls amid restricted credit access
SCB EIC says the fall to 85.9% of GDP reflects restricted access to formal credit, while many households turn to easier sources of borrowing.
- Thailand's household debt-to-GDP ratio fell to 85.9%, a six-year low, but this is primarily due to restricted access to credit from major financial institutions, not improved household finances.
- The decline was also aided by GDP growing faster than household debt, which mathematically lowered the ratio without reflecting a better ability for households to repay their loans.
- In response to tight credit from banks, households are increasingly borrowing from alternative sources like pawnshops and savings co-operatives, indicating that underlying financial fragility persists.
Thailand’s household debt-to-GDP ratio fell to 85.9% in the first quarter of 2026, its lowest level in six years, but SCB EIC warned against interpreting this as a positive sign for household finances.
The decline was driven mainly by constraints on access to formal credit, while many households turned to other, more accessible sources of borrowing, reflecting continued financial fragility.
Household debt at six-year low, but not a recovery signal
SCB Economic Intelligence Centre (SCB EIC), a unit of Siam Commercial Bank, said Thailand’s household debt-to-GDP ratio fell to 85.9% in the first quarter of 2026, the lowest level in six years.
However, the decline did not indicate that the financial health of Thai households had improved, but was mainly the result of restricted access to credit.
Although total household debt returned to year-on-year growth of 0.5%, after virtually no growth in the previous quarter, most of the increase still came from consumer credit.
Lending by major financial institutions continued to contract for more than two years, falling by around 2.1%, indicating that banks and credit providers continued to apply tight lending standards.
Bank lending keeps contracting as households find borrowing harder
SCB EIC said household access to credit remained constrained, particularly among individual borrowers and groups facing income risks.
As a result, lending by major financial institutions had yet to return to growth.
Although state financial institutions continued to support household liquidity through various measures, growth in their lending slowed to just 1.6%.
The situation indicates that the decline in the household debt ratio did not result from improved debt repayment or a significant rise in income, but from households being less able to obtain new loans than in the past.
Pawnshop and savings co-operative lending rises sharply, reflecting fragility
Another worrying sign was the expansion of lending outside the main financial institution sector.
Pawnshop lending grew by as much as 18.3% year on year, while lending by savings co-operatives rose 5%.
SCB EIC said many households had begun turning to sources of credit with more flexible terms and easier access, whether by pawning assets for short-term liquidity or borrowing through co-operatives with clear income information and repayment-deduction mechanisms.
The trend indicates that the risks associated with household debt have not disappeared from the economy, but are increasingly shifting towards sources of credit outside the main financial institution system.
GDP growth of 2.9% accelerates the fall in the debt ratio
Another key factor behind the rapid fall in the household debt-to-GDP ratio was economic expansion in value terms.
GDP grew by 2.9% in the first quarter of 2026, supported by exports and private investment.
As GDP, the denominator in the household debt ratio, grew faster than debt, the ratio declined even though the total value of household debt continued to rise, and people’s ability to service debt had not clearly improved.
Household debt ratio forecast to fall to 83.5-84.5% by year-end
SCB EIC estimated that the household debt-to-GDP ratio would continue to fall to 83.5-84.5% by the end of 2026, but described this as “deleveraging driven by constraints on access to credit”, or Constraint-driven Deleveraging, rather than debt reduction stemming from stronger household finances.
Key factors behind the trend include continued tight lending, greater household caution over taking on new debt because of the high cost of living, and nominal GDP growth supported by inflation, particularly energy-price risks linked to the situation in the Middle East.
4 risks still weighing on Thai household finances
Despite the lower household debt-to-GDP ratio, SCB EIC said household finances remained fragile because of several factors.
- The labour market had begun to show signs of weakening, including a higher unemployment rate, fewer working hours and a renewed contraction in average wages, directly affecting household income.
- Some debt may not yet be reflected in official household debt figures, particularly borrowing from village and urban community funds and through informal channels, which low-income groups still rely on heavily.
- Household credit quality still requires close monitoring. Although early-stage problem loans and non-performing loans had gradually improved, both remained at high levels, reflecting tight financial conditions and restricted access to new credit.
- Heavily indebted households continued to face income that was insufficient to cover expenses, particularly low-income groups whose total outgoings, including debt repayments, exceeded their income.
