Thailand’s household debt set to cross 91% of GDP by yearend, predicts bank

TTB Analytics, an economic analysis centre affiliated with TMBThanachart Bank, attributed this trend to a sluggish economic recovery resulting in slow income growth for individuals.

The surge in finance costs has further exacerbated the situation, affecting borrowers’ debt-paying abilities, the centre said, adding that many end up relying on informal sources or loan sharks instead.

Bank of Thailand (BOT) data indicates that the total outstanding balance of household debts in the third quarter of 2023 was 16.2 trillion baht, marking a 3.4% year-on-year rise and accounting for 90.9% of Thailand's gross domestic product (GDP).

The central bank also reported that non-performing loans in banks came in at 152 billion baht during the same period, reflecting a 3.6% increase from the previous quarter. The portion of outstanding debt falling within the 1-to-3-month range amounted to 362 billion baht, BOT added.

TTB Analytics said the debt challenge was rooted in the slow recovery of the economy and stagnant income levels.

While the Thai economy exhibits signs of recovery, particularly in the export sector, the benefits are concentrated in large companies.

The centre also noted that the tourism industry, primarily propelled by small businesses, is experiencing slow growth, and the financial condition of these businesses remains "fragile".

Underscoring the spending habits of Thai consumers, the centre also raised concerns about undisciplined spending.

While an uptick in household debt may stimulate short-term consumption, hitting 80% of the GDP is excessive and could have long-term repercussions on the economy, it warned.

Thailand has consistently seen its household debts to GDP ratio surpass 80% since 2015, with a significant portion categorised as non-productive loans – a notably higher proportion when compared to neighbouring countries like Malaysia and China, where figures stand at 14% and 13%, respectively, the centre said.