Thailand’s household debt recorded a slower growth rate in the fourth quarter of 2022, reaching 86.9% of the country’s GDP. Although the overall loan quality remained stable, there is a need to closely monitor certain segments, particularly automobile loans, which have seen an increase in risky loans leading to higher bad debts. Additionally, bad debt accounts in personal loans continue to rise.
During the fourth quarter of 2022, household debt reached 15.09 trillion baht, reflecting a growth rate of 3.5%, which was slower compared to the 4.0% growth rate in the previous quarter. Adjusting for seasonal factors, the increase was 1.1% from the previous quarter. The household debt-to-GDP ratio stood at 86.9%. Despite the stable debt serviceability, with the ratio of non-performing loans (NPLs) to total loans in the commercial banking system remaining at 2.62%, caution is necessary due to the rising risks in auto loans and personal loans affected by the COVID-19 situation.
The high level of household debt poses a risk to the economy, highlighting the need for concerted efforts from all sectors to address this issue. It is crucial for individuals to understand their spending capacity and refrain from unnecessary purchases while managing their existing debts and avoiding new ones. Similarly, the business sector should be mindful of marketing practices, such as 0% installment plans, which have contributed to the increase in household debt in the past.
Efforts to address the household debt problem should remain ongoing, with a focus on individual financial responsibility and the responsible marketing practices of businesses. By actively managing household debt, Thailand can work towards achieving a more sustainable and resilient economic environment.