BOT data on second-quarter household debt gives mixed signals
Though debt was down QoQ, it rose by THB212 billion compared to 2023
Thailand’s outstanding household debts in the second quarter contracted quarter on quarter (QoQ) but rose year on year, according to data revealed by the Bank of Thailand on Tuesday.
Household debt in Q2 totalled 16.32 trillion baht, down by 35.26 billion baht or 0.22% QoQ.
However, when compared to the same period last year, Q2 household debt increased 1.32%, or by 212.1 billion baht.
Household debt as a percentage of gross domestic product (GDP) in Q2 stood at 89.6%, dropping slightly from 90.7% QoQ. It was the lowest in four years, the BOT said.
The central bank elaborated that businesses contributed to more household debt, including pawn shops (+6.05% QoQ), asset management companies (+3.6%), savings cooperatives (+0.97%), and insurance companies (+0.12%).
Meanwhile, businesses that saw decrease in household debts were securities companies (-4.44%), credit card, leasing and personal loans (-0.72%), and other financial institutions (-0.33%).
Commenting on the BOT report, Kasikorn Research Centre said the main factors contributing to the contraction in household debt were higher repayment rate by borrowers, and fewer new loans granted by financial institutions – both commercial banks and non-banks.
“The decrease in household debt as a ratio of GDP could be attributed to several sectors, but it did not necessarily mean that the debt burden of Thai households had decreased,” Kanchana Chokpaisansin, research executive at KResearch, said.
Families in vulnerable groups were still overwhelmed by debts due to their limited repayment capability, she added.
The ratio of household debts at 89.6% of GDP, though the lowest in four years, was still higher than the 80% rate that the Bank for International Settlements recommends for countries to maintain so they could manage their household debt in a sustainable manner, she said.
“The level of Thai household debt continues to put pressure on economic potential and remains a structural issue that needs ongoing attention and resolution,” said Kanchana. Kasikorn Research Centre would revise its household debt projection at 90.7% of GDP by the year-end to align with the emerging figures, she added.
