Thai household debt deeper than ever

[buksida]

Personal loans soar amid economic woes
The commercial banking sector showed strong growth in the personal loan category during the first quarter this year because of greater household demand for liquidity to support daily spending needs amid the economic doldrums.

According to the Bank of Thailand, the commercial banking industry's personal loan growth in the first quarter stood at 6.6% year-on-year, the largest expansion among all loan products, although it was a decrease from the 7.8% growth recorded in the previous quarter, said Suwannee Jatsadasak, the central bank's senior director.

Personal loans continued to grow because households needed the cash for daily expenses, Ms Suwannee said.

Given the uneven economic recovery, individual borrowers with lower incomes needed higher liquidity for daily spending, she said.

https://www.bangkokpost.com/business/23 ... nomic-woes

[buksida]

Household debt crisis looms as rates hike
With interest rates set to rise in the second half of the year, increased household debt could deal a heavy blow to the Thai economy, weakening consumer purchasing power and slowing economic growth, according to KKP Research.

Thailand's household debt now exceeds 90% of Thai GDP, ranked 11th-highest in the world, as households struggle to make ends meet.

Most households in the lowest 20% have an average monthly income of only 10,000 baht, while the minimum monthly expenditure is 12,000 baht. These households resorted to borrowing to pay for daily essentials, driving up the proportion of short-term consumer debt to total household debt, said the research house.

Thailand's per capita income is also very low compared with countries with similar levels of debt, suggesting the Thai economy is more vulnerable to impacts from indebtedness than other countries, KKP Research stated.

According to Credit Suisse, Thailand has one of the highest levels of wealth inequality in the world, and debt tends to be concentrated in low-income households that have a lower asset-to-debt ratio. As a result, when interest rates rise, these households have to reduce their consumption to pay off their debts, which will slow economic growth.

https://www.bangkokpost.com/business/23 ... rates-hike

Funny how the politicians/generals (who know squat about economics) are all singing the same tune that things are getting better ...

[buksida]

Household debts solution team set to propose ways to resolving the elephant in the room
The rising household debt of Thailand has finally caught the attention of the government of 2014 coup leader Prayut Chan-ocha, and the incumbent Prime Minister has set up a committee headed by Deputy Prime Minister Supattanapong Punmeechaow.

Thailand’s household debt has risen to more than 90% of Thailand’s gross domestic product (GDP), the 11th highest in the world. As of end of Q1 2022, the latest data available, the household debt stood at around 89.2% down from 90% seen during the previous quarter.

The household debts stood at 14.65 trillion Baht and the end of March against 14.57 trillion seen at the end of 2021. The decline in terms of percentage there was a decline as the economy expanded from those seen during 2021.

The high household debt has created a problem of drop in consumption, a key component of the economic growth that has been stalling ever since the outbreak of the Covid-19 outbreak in 2020. The high household debt has kept people from spending money on buying white goods and other consumption items that helps keep the economy humming.

Realizing that the high household debt is going to be a major hurdle to any economic growth of the country, General Prayut in June appointed a committee headed by Supattanapong to look at ways to resolve this issue.

https://www.thaienquirer.com/42047/big- ... -the-room/

[migrant]

This article probably does not take into consideration private debt. Most Thais I know have some

[buksida]

In Thailand, having a regular job could still leave you US$218,000 in debt

Jiraporn Maysoongnoen, 58, cannot recall when she was ever debt-free. As a new teacher at 18 with a monthly salary starting at 2,200 baht (US$60), she took out a loan for a motorcycle so she could ride to work in eastern Thailand.

To supplement her income, she started a tour business two decades ago, borrowing again to buy tour buses. Her debt grew after she bought a new family house, while supporting her family and paying off credit card loans.

Even though she now earns 30 times what she did four decades ago, Jiraporn says she has never once been in the black. Her debt continues to stand at 8 million baht (US$218,000) today.

“I don’t know if my debt will ever be paid off by the time I’m 80,” she said. “But how could I get to acquire anything in life without the help of loans?”

Even though Jiraporn earns a regular income, unlike millions of people in Thailand’s informal sector, she is part of the household debt crisis that affects about half the country’s 66 million people.

According to Bank of Thailand official Kajorn Thanapase, many Thais become indebted when they are young or at the start of their career. Speaking at a recent seminar held by think tank Think Forward Center, he said data showed half of people over 30 years old carried financial debt, and one-fifth of them were in no position to pay them off, leaving them with “economic scars” and affecting their productivity and emotional stability.

https://www.scmp.com/week-asia/economic ... 18000-debt

The Hoi polloi all still crave these fancy SUVs and latest model iPhones to keep up with the hi-sos ...

[handdrummer]

My eldest daughter buys whatever she wants and is in serious debt. My youngest daughter buys what she needs, has no debt, and has a large savings acct.

[buksida]

Household debt 'worrying' but no problem yet, says central bank
The ratio of Thailand's household debt to gross domestic product is currently at a "worrying" 90.6%, the central bank said on Monday, adding that it posed no real problem at present.

Bank of Thailand assistant governor Suwannee Jatsadasak said at a media briefing the rate had started to fall and there was no sign of a surge in non-performing loans.

Thai banks' non-performing loans dropped to 2.68% of lending at the end of March from 2.73% at the end of 2022, helped by debt restructuring, the central bank said earlier. The banking system remains resilient with high levels of capital, loan-loss provisions and liquidity, the central bank has said.

The debt ratio of 90.6% at the end of March was down from 91.4% in the previous quarter, central bank data showed, as the economy continues to recover. The debt amount, however, rose to 15.96 trillion baht (US$452.51 billion) at the end of March, up from 15.87 trillion baht at the end of 2022.

https://www.bangkokpost.com/business/26 ... ntral-bank

Of course the central bank says no problem, it'll just print more currency!

[Big Boy]

It is a shame, but the numbers reported in the OP don't really correspond to numbers reported above. I have been trying to do a comparison.

However, using my (mainly Thai) soi as an example, when I moved here 11 years ago, there were only 5 other cars in my soi. Now it seems every house has at least 1 car, and some houses have 4. Most houses had a motorcycle, but I'd now estimate each house has an average of 3. It would be very interesting to know how much of these new found possessions are paid for. Multiply those numbers throughout Hua Hin, and that is a lot of potential debt.

Then there are smaller things like mobile phones. About 50% had a bog standard push button phone when I moved to Thailand. Now it seems that 90% of Hua Hin's population has a smart phone, including many toddlers. These things aren't cheap for the average Thai wage. Add to that the cost of Internet.

Aircon was quite rare amongst the Thai population when I moved here. Now you rarely see a household without at least one unit. When I bought our house, we had one unit in the main bedroom. The builder suggested I was being extravagant insisting-on a second unit in the other bedroom. I've since installed a third in the living room. OK, I can afford it, but these days most Thais have the equivalent or more. How have they paid for it, and the subsequent electricity bills?

I could go on, but my point is Thais have most things I have, but on minimal wages. In many cases, a lot newer as well. Is it any wonder household debt is so high in such a materialistic world? There is no way so many Thai people could be paying for all of the material things they now have.

One of the recent posts above talks about the amount of motor vehicle loans that are now being defaulted on, and how it will get much worse in the near future. If banks re-possess the vehicles, who will they sell them to unless they lend even more money. Thailand is well and truly fcuk'd - it's just a shame that isn't reflected in the value of the ฿.

[dundrillin]

I thought the debt to GDP ratio was higher in the UK. OH I forgot the UK's is fcuk'd as well

[caller]

I thought the debt to GDP ratio was higher in the UK. OH I forgot the UK's is fcuk'd as well

Have you been reading the reports? If so, you would have learnt that the big difference is the type of debt. In the west, just choose a Country, it is generally long term collaterised mortgages. Part of the fabric of society really. In Thailand, such debts, plus car debts, accounts for about only 30% of the loans at risk. In addition, there are all the illegal loans as well. So basically no chance of the banks getting their money back.

[STEVE G]

. In the west, just choose a Country, it is generally long term collaterised mortgages

That keeps working as long as everyone is agreeing that those houses are really worth a million or whatever they sell for now.

[caller]

. In the west, just choose a Country, it is generally long term collaterised mortgages

That keeps working as long as everyone is agreeing that those houses are really worth a million or whatever they sell for now.

Yes, but history is on their side.

[buksida]

Its apples and oranges really, property collateral in a developed country is much more secure for a bank than millions of people taking out loans for iPhones, big TVs, scooters, or in the extreme SUVs that are worth more than their homes!

Besides, none of these articles or central bank stats address the massive problem of black market debt and loan sharking in Thailand ... so its real debt ratio is probably well into triple figures in reality. The whole system here is one big house of cards.

[buksida]

Thailand’s household-debt storm taking deadly toll on guarantors
Thailand’s household debt has ballooned to almost 16 trillion baht, with more and more Thais at risk of defaulting on their loan repayments. The pressure then falls on guarantors, who are often family members or friends of the debtors. And that pressure is taking a deadly toll.

Earlier this month a police captain killed himself after a bank pressed him to take responsibility for repayment of his friend’s 800,000-baht loan.

This was not the first time that a pressured loan guarantor has committed suicide.

Late last year, another woman lost her husband in similar circumstances. The 69-year-old retired official of the Royal Irrigation Department fatally shot himself after being told he had to pay his friend’s debt as the guarantor.

“He was under so much stress and had been complaining about his friend and his status as guarantor,” his wife lamented.

In other cases, the stress fell on the guarantor’s family members. In December 2021, a 32-year-old woman tied her hands and those of her nine-year-old daughter together and was getting ready to jump off a Bangkok bridge.

The mother was distressed because her partner had fallen into serious financial trouble after his friend defaulted on a house loan. As a guarantor, the woman’s husband was forced to pay the loan.

Fortunately, a passing motorcyclist noticed the mother and daughter, and several good Samaritans gathered to persuade them to abandon their suicide plan.

https://www.thaipbsworld.com/thailands- ... uarantors/

[buksida]

Lets make everyone's debts a bit bigger shall we ...

Thailand set to hike key interest rate to 9-year high
The Bank of Thailand (BoT) is poised to deliver another rate increase in line with an unwavering post-pandemic tightening strategy despite rapid disinflation and political gridlock.

The central bank will raise the benchmark one-day repurchase rate by 25 basis points to 2.25% on Wednesday, the highest level since January 2014, according to 19 of 21 economists surveyed by Bloomberg. The rest forecast a hold for the first time in a year.

Thailand’s policymakers continue to telegraph hawkish signals even after inflation cooled faster than most regional peers that have already paused tightening, or in the case of Vietnam already pivoted to rate cuts. Authorities are banking on tourism revival and firmer economic rebound to counter risks from delayed government formation.


https://www.bangkokpost.com/business/ge ... -year-high

Good luck with that ... banking on Indian and Chinese tourists to save the country from the political shitstorm ...