Thai household debt deeper than ever

[Coldmike]

I know Thais who borrowed double what the house cost, and since moving in, they've bought??? 2 new cars and 7 motorcycles - I think they see it as a sign of wealth. The fact is they don't have 2 Baht coins to rub together. The question is, how do they get this unsecured credit in the first place?

It does seem to be a house of cards ready to fall. Anecdotally, Sister in law bought a house 4 years ago, 100% financed with no regular income. Invested some to fix up, but now can’t afford it and is looking to sell for triple what she paid 20 years ago this was common, but now? I personally know several ‘polite’ loan sharks that charge their friends 3% per month and they are doing a steady business. God knows what the real black market is like now

On maybe a slightly positive note, I’ve noticed that most new cars seem to be Toyota’s and such. 25 years ago the streets were flooded with Mercedes and BMWs. Still, I’ve no clue how Thais afford 1 million baht toyotas on their salaries

[buksida]

Household debt levels to rise further
Household debt levels, already at the highest in 17 years, are expected to rise further, the central bank governor said on Thursday, as the coronavirus pandemic hammers its trade-and tourism-reliant economy.

The economy suffered its biggest contraction in 22 years in the second quarter and could shrink a record 7.8% this year, the Bank of Thailand has forecast.

"The pandemic had cut jobs, reducing households' income and debt servicing ability," governor Sethaput Suthiwartnarueput told reporters.

"The employment situation has not yet returned to normal," he said, noting the economy would not get back to pre-Covid levels until the third quarter of 2022.

As of June, household debt rose to 13.6 trillion baht, equal to 83.8% of GDP, the highest since 2003 and among the highest levels in Asia.

The debt was at 79.9% of GDP at the end of 2019.

The Federation of Thai Industries has estimated job losses at a record 2.5 to 3 million this year, of which more than a million are in the tourist sector. Thailand has a workforce of about 38 million.

https://www.bangkokpost.com/business/20 ... se-further

[buksida]

High household debt – made worse by the pandemic – could sink the economy, experts warn
Experts are warning, this week, that high household debt could sink the economy with Covid-19 fallout exacerbating a longstanding issue in the country.

Even before the pandemic, Thailand has some of the highest household debt rates in the world when measured as a percentage of income. A study by the Bank of Thailand as far back as 2014 found that high household debt contributed to lowered consumption sentiment and lowered purchasing power.

Other studies including those conducted by the TDRI in 2016 showed that the economy was severely hampered by the effects of high household debt and lowered purchasing power. At the time, household debt levels reached 80 per cent of the GDP.

The situation has been made worse by the pandemic. The Bank of Thailand said last year that Thai household debt in of 2020 reached 83.8 percent of the GDP. Analysts at the Kasikorn Research Center (K-research) say that percentage could be closer to 90 per cent by year’s end if government policies do not help ease the burden on households.

On Monday, Thanavath Phonvichai, the president of the Center for Economic and Business Forecasting at the University of the Thai Chamber of Commerce (UTCC), said that the average household debt expanded 42.3 per cent in the past year, approaching 484,000 baht per household.

According to a survey done by the UTCC, the higher cost of living during the pandemic, the lack of income from lay-offs, and inadequate financial stability were the main drivers of increasing household debt.

The UTCC said that if unaddressed and not eased by better government policy, the situation could exacerbate further and lead to rising non-performing loans.

https://www.thaienquirer.com/22754/high ... erts-warn/

The gooberment's solution is clear: 'mai pen rai, borrow some more, have another holiday ...'

[buksida]

Households pile up debt as new virus wave weighs on income
Thailand’s household debt, already among the highest in emerging Asia, is expected to rise further as a fresh Covid outbreak curbs incomes, weighing on consumer spending and heightening financial-stability risks.

Household debt stood at 13.8 trillion baht, or 87% of gross domestic product, at the end of September 2020, up from 79% a year earlier, according to Bank of Thailand data. Debt levels will be one of the risks the BoT considers in its policy decision on Wednesday after its latest meeting minutes cited household finances as a factor that warrants attention.

Even before the pandemic, “we were already concerned about the household debt level in Thailand, as it inhibits private consumption spending and long-term potential growth,” said Charnon Boonnuch, an economist at Nomura Holdings Inc in Singapore. The new outbreak, a worsening labour market and risks of another recession “will result in an even faster increase in household debt-to-GDP this year, weighing further on the already weak economic recovery.”

Thailand’s tally of Covid cases has more than tripled since mid-December, and the Finance Ministry last week lowered its GDP forecast for the year to 2.8%, from the 4.5% it expected as recently as October.

Despite that, one reason the central bank may hesitate to ease further -- its key interest rate is already at an all-time low of 0.50% -- is “the concern that loosening interest rates will see additional borrowing from households,” HSBC Holdings Plc economist Noelan Arbis said.

https://www.bangkokpost.com/business/20 ... -on-income

[HHTel]

Thai police officers crippled by accumulated 270 billion baht debt

Thailand’s police officers have amassed a total of 270 billion baht in debts. The staggering accumulated debt trap of the country’s individual police officers was revealed yesterday by the national police chief Suwat Jangyodsuk. During Covid there has been fewer hours and overtime for duty policeman. And in the popular tourist areas there have been fewer tourists to ‘police’ and many of the businesses that used to pay tea money for security and protection have either gone out of business or simply refused to make the payments whilst the tourist zones have been devoid of International tourists.

https://thethaiger.com/news/national/th ... llion-debt

The police are definitely suffering without 'on the spot fines' and no 'tea money' as businesses close.
A factor which will only heighten the corruption in the force.

[buksida]

I would have thought they'd be rolling in it with the amount of money they have been stinging bars/restaurants/businesses for selling booze and 'breaking the law'.

This sort of crap has been going on for nearly a year so they've been creaming it in from other avenues ... https://thethaiger.com/news/bangkok/pol ... ncy-decree

The ones in tourist towns that are used to easy prey will be hurting though, yes.

[buksida]

The Thai household debt situation after COVID-19
With the anticipated progress of vaccine distribution in Thailand and major economies, together with the government’s ongoing economic stimulus measures, it is believed that the Thai economy will soon emerge from its trough in the first quarter of 2021, and will see further improvement during the remainder of the year, barring any major disruption that could be caused by another outbreak of the virus.

The possibility of an economic recovery could bring about some benefit but when it comes to the debts it is a different story because debts tend to lag in the economic cycle, meaning that the country’s household debts is expected to continue their upward trend and reach 89.0-91.0% by year-end, compared to an estimated 89.2% at year-end 2020 and 86.6% in the third quarter of 2020.

This increasing trend of household debts does not surprise and in fact seems inevitable in most countries, as economic growth – hit by the pandemic – either contracted or slowed in 2020, while loan growth continued its upsurge following financial-aid measures and repayment moratoria.

Nevertheless, the near-term focus is not on how to reduce household debts, but rather how to assist households that are still struggling to survive this economic crunch.

https://www.thaienquirer.com/26412/the- ... -covid-19/

[handdrummer]

The Thai household debt situation after COVID-19
With the anticipated progress of vaccine distribution in Thailand and major economies, together with the government’s ongoing economic stimulus measures, it is believed that the Thai economy will soon emerge from its trough in the first quarter of 2021, and will see further improvement during the remainder of the year, barring any major disruption that could be caused by another outbreak of the virus.

The possibility of an economic recovery could bring about some benefit but when it comes to the debts it is a different story because debts tend to lag in the economic cycle, meaning that the country’s household debts is expected to continue their upward trend and reach 89.0-91.0% by year-end, compared to an estimated 89.2% at year-end 2020 and 86.6% in the third quarter of 2020.

This increasing trend of household debts does not surprise and in fact seems inevitable in most countries, as economic growth – hit by the pandemic – either contracted or slowed in 2020, while loan growth continued its upsurge following financial-aid measures and repayment moratoria.

Nevertheless, the near-term focus is not on how to reduce household debts, but rather how to assist households that are still struggling to survive this economic crunch.

https://www.thaienquirer.com/26412/the- ... -covid-19/

Subtitle: How To Create A Slave Class.

[Big Boy]

No surprise here:

debt.jpg (88.28 KiB) Viewed 30533 times

[fft100]

A couple of points on the survey above.

1.. does that include mortgages for land/property etc ? That would heavily distort figures if included.

2. The increase in formal debt (i.e. banks) is to be welcomed. Informal debt normally incurs far higher interest and is more dangerous.

[buksida]

Non-performing loans are also off the chart, which is not good news for banks. This was reported almost a year ago and the situation will be far worse now.

https://www.thaienquirer.com/14894/non- ... e-economy/

[buksida]

Debt avalanche may curb consumption
Rising household debt may slow the country's economic recovery, as people use their income to repay debt rather than spend on consumption, warns the government's planning unit.

Jinanggoon Rojananan, deputy secretary-general to the National Economic and Social Development Council (NESDC), said the latest wave of Covid-19 infections have triggered not only a surge in household debt, but also a drop in income.

Ms Jinanggoon said the surge of infections also affected people's ability to repay debts, leading to an increase in the amount they owe.

The Bank of Thailand reported last week Thailand's household debt ratio to GDP rose to 90.5% in the first quarter, the highest since 2003, as Covid-19 outbreaks continue to batter the economy.

At the end of March, household debt increased to 14.1 trillion baht from 14.0 trillion at the end of December, equal to 89.4% of GDP, already among Asia's highest.

https://www.bangkokpost.com/business/21 ... onsumption

[Big Boy]

And it continues to get worse......

State welfare card initiative unsuccessful in helping Thais fight poverty

Thailand’s state welfare card program has failed to reduce poverty, the Finance Ministry said this week, citing the economic downturn caused by the Covid-19 pandemic and rising unemployment.

The Fiscal Policy Office noted that increasing registrations for the welfare card show that the program is not working.

Kulaya Tantitemit​​, the Director-General at the Fiscal Policy Office said that the government wanted to see fewer people applying for the new round after receiving financial aid.

The new round of state welfare card registration will open “soon.”

However, “since the Covid-19 crisis has devastated the economy for almost two year, the result may not be as expected,” she said.

Welfare cardholders are entitled to monthly subsidies to support living costs, including the previous cash-handouts program to cope with the pandemic.

https://www.thaienquirer.com/32612/stat ... t-poverty/

[buksida]

Solution to escalating national debts ... borrow more, though this is happening globally.

Govt to raise debt ceiling
The government has decided to raise the ceiling of the public debt-to-GDP ratio from 60% to 70% which will allow further borrowing to rehabilitate the economy battered by Covid-19.

The decision was made by the State Monetary and Fiscal Policy Committee chaired by Prime Minister Prayut Chan-o-cha on Monday.

The committee is made up of representatives from the Finance Ministry, Bank of Thailand, the National Economic and Social Development Council and the Budget Bureau.

Finance Minister Arkhom Termpittayapaisith said that the decision was intended to provide the government with more fiscal space should the need arise for the government to borrow more money to carry out medium-term financial policies. Mr Arkhom assured that the government still has the ability to repay debts.

"The revision of the ceiling is in line with Section 50 of the 2018 State Fiscal and Financial Discipline Act which authorised the committee to revise it every three years," he said.

A Finance Ministry source said that the decision to raise the ceiling corresponded with the global and domestic economic situations impacted by Covid-19 as the government has increased its financial burden to rehabilitate the flagging economy.

The government issued its first emergency loan decree last year to authorise it to borrow 1 trillion baht to fund its stimulus schemes to combat the pandemic. A second decree was issued this year to allow the government to borrow an additional 500 billion baht.

https://www.bangkokpost.com/thailand/ge ... bt-ceiling

[handdrummer]

I suppose the tax cuts on alcohol and tobacco will raise enough money to pay off the debt. (sarcasm)