Bank of Thailand says Thai household debt continues to decline

On October 6th, the Bank of Thailand made a significant announcement regarding household debt trends in the country. They reported a decrease in household debt during the second quarter of this year, and there are expectations that this decline will continue into the third and fourth quarters.

For years, Thailand has struggled with high household debt levels, largely due to a culture of overspending that has posed considerable challenges to both social and economic development.

Looking ahead, the Bank of Thailand projects a 2.6% growth in the nation’s GDP for 2024, estimating it will reach around 18.15 trillion Thai baht, which is approximately 3.94 trillion RMB. Their data indicates that by the second quarter of 2024, total household debt is expected to drop to 16.3 trillion Thai baht (about 3.54 trillion RMB), or 89.8% of GDP, down from 16.4 trillion baht, which accounted for 90.8% of GDP in the first quarter.

Chayawadee, the assistant director of the bank’s corporate relations department, explained that the reduction in the debt-to-GDP ratio during the second quarter can be attributed to overall GDP growth, repayments of existing debts, and a slowdown in new loan growth.

In terms of housing loans, growth has been modest, with outstanding loans rising only 0.57% from the previous quarter. Notably, commercial bank loans make up a significant portion of the overall household debt, totaling 6.67 trillion baht.

Chayawadee also highlighted that the slowdown in loan growth is particularly evident in certain categories, such as auto purchase loans. The uncertainty surrounding pricing competition in the automotive sector has prompted consumers to delay car purchases, leading to a notable reduction in auto loans.

Looking to the future, the Bank of Thailand expects GDP growth rates in the third and fourth quarters to surpass those of the second quarter, alongside an anticipated increase in residents’ incomes. With the continuous deceleration in bank loan growth, household debt is projected to decrease further in the upcoming quarters.