Covid triggers jump in Thai household debt
The Covid-19 crisis has driven up household debt as job losses and falling income weaken the ability to make payments, new Bank of Thailand (BOT) governor Sethaput Suthiwartnarueput said on Thursday.
Thailand’s household debt jumped this year from 80 per cent of gross domestic product (GDP) in the first quarter to 83.8 per cent in the second quarter.
“Falling income caused by the virus impact has contributed to a rise in household debt,” Sethaput said.
He explained that although Thailand’s unemployment rate is relatively low, many workers had moved from higher-paying jobs in manufacturing, services and tourism, into agriculture. Many are also working fewer hours.
According to a BOT study, the same debtors account for 80 per cent of Thailand’s household debt over the past nine years. One in five pensioners is in debt, with those aged 61-65 owing an average Bt100,000.
More younger people are also entering the borrowing cycle, with 50 per cent of those aged 30-40 now in debt, mostly via personal loans and credit cards.
Looking forward, household debt will continue to rise for the next two years, with the economy projected to recover to pre-Covid levels in the third quarter of 2022, he warned.
The central bank would launch more measures to deal with long-term problems, Sethaput said, without revealing any details.
The BOT has urged banks to continue providing support for companies and individuals struggling with debt when its current measures, including debt-payment suspension, end this month.
The central bank is also keeping a close eye on debt restructuring, added Sethaput.
