Household debt continues to pose a significant challenge for policymakers in Thailand, with fears it could destabilise the economy. The Fiscal Policy Office reports that it stood at 89.6% of GDP by the second quarter of 2024. This marks a slight decrease from the first quarter’s 90.7%, yet it remains alarmingly high when compared to recommended thresholds.
Pornchai Thiraveja, director-general of the Fiscal Policy Office, noted the persistent elevation of household debt above advisable levels.
The Bank for International Settlements has highlighted the potential risk of household debt surpassing specific limits. Their study indicates that excessive household debt can hinder long-term economic growth, outweighing any short-term benefits from increased consumer spending.
In response, the Finance Ministry and the Bank of Thailand have launched the You Fight, We Help initiative, aiming to alleviate this burden. The programme offers a three-year suspension on interest payments, with the government stepping in to cover these costs, thus providing crucial relief to indebted households.
Pornchai emphasised that although household debt levels are high, much of it is invested in wealth-creating activities such as asset purchases, business ventures, and education.
This perspective is supported by data showing that 34.1% of household debt is directed towards acquiring assets like real estate, while 10.6% is allocated for vehicles. Such investments can potentially generate income, with vehicles often used for commercial purposes.
Further analysis reveals that 17.6% of household debt supports business activities, and 4.1% is dedicated to education. Together, these categories account for over 66.5% of the total structure, indicating a focus on long-term financial stability.
Moreover, approximately 44.7% of household debt is secured, including mortgages and car loans, reflecting a trend towards debt incurred for asset acquisition rather than mere consumption, reported Bangkok Post.
Pornchai expressed optimism, suggesting that by 2025, household debt levels are likely to decline as financial institutions implement stricter lending criteria, particularly for housing and vehicle loans.
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