Thailand’s household debt falls for the first time in 42 months - NESDC

Thailand’s household debt dropped in the second quarter of this year to 89.6% of GDP, from 90.7% in the first quarter, which is the first fall in three and a half years, according to Danucha Pichayanan, secretary-general of the National Economic and Social Development Council (NESDC), today.

Although the decrease is a healthy sign, he noted that household debt in Thailand is still higher than in other countries in the region, but added that, if the rate of economic growth can be maintained, household debt is likely to improve accordingly.

Danucha said that the NESDC will monitor household debt incurred from personal consumption, which attracts high interest rates. If households lack financial discipline, these high rates may cause them to fall into the debt trap.

Debt for consumption accounts a third of all household debt and a high proportion of such debt is delinquent, requiring the Bank of Thailand to play a role in curbing debt through responsible lending.

Danucha said that the tightening of access to funding by commercial banks may force debtors to turn to informal lenders.

According to the Credit Bureau, NPLs in the second quarter were estimated at over 1.16 trillion baht across 9.6 million accounts, or 8.48% of total bank lending, compared to 8.01% in the first quarter.

71% of the NPLs were reported in commercial banks and special financial institutions. NPLs in the second quarter increased by 12.2% from the first quarter, mainly involving mortgages and car loans.

Danucha said that Thai households created 67 billion baht of informal debt last year, 47.5% of which was spent on consumption.