Economic and Business Research Center Siam Commercial Bank (EIC) assessed the proportion of household debt, which is expected that the first half of household debt will be in the range of 89.5% – 90.5% to GDP. This should be gradually reduced in the second half of the year as the country goes into endemic.
Household debt is an important risk factor for the Thai economy in the future. If left untreated, it will become a drag on economic recovery and a time bomb that can explode, jeopardizing the stability of the financial system.
An analysis of data from the National Statistics Office’s Economic and Social Survey showed that high household debt has long been a problem, and the Covid-19 crisis exacerbated it.
Debt Service Ratio: The average debt service ratio of Thai households was 30% before Covid (2018).
And when the Covid-19 crisis broke out in 2019-2020, the Thai economy was hit hard by the decline in household income. Households had to borrow to maintain consumption levels. The proportion of the average debt burden has risen faster than 30% until the debt burden became a traction driver for consumption and economic recovery.
Looking ahead, even household income is expected to recover in line with economic activity. However, the high debt burden will continue to be a burden, as households will have to raise more income to pay off existing debts and maintain living standards.