Thai household debt deeper than ever

[caller]

According to Chartchai Parasuk, who writes for the BP, these figures are not the true figures, just the ones that massage the figures. Data collected by the agency responsible for monitoring debt, can't think of it's name off the top of my head, puts the NPL figure as much higher. He usually quotes them in his reports, but not in the para covering it in this report from 16 May.

https://www.bangkokpost.com/opinion/opi ... ic-figures

[buksida]

$500 billion debt weighs on new Thai PM as millions struggle to pay house, car loans

BANGKOK – Thailand’s 38-year-old Prime Minister is working on a plan to alleviate the economic drag from a household debt bill topping US$500 billion – a figure that has ballooned since her father first took office in 2001.

Ms Paetongtarn Shinawatra’s administration, which took office in September, is in talks with banks to find ways to help millions of borrowers struggling to pay car and housing loans. A debt relief package – expected to be announced in the coming weeks – may include allowing banks to pay lower fees to the state bailout fund in exchange for providing easier terms to debtors.

The nation’s household debt ratio of 90 per cent of gross domestic product (GDP) is around double the average of emerging market economies’ ratios and above the 80 per cent level that the Bank for International Settlements considers worrying. The debt drag helps explain the cautious stance of the central bank, which until Oct 16 had resisted government pressure to cut interest rates for fear of fuelling even more loan growth.

“An elevated level of household debt in Thailand is concerning as it could suppress private-sector spending and weigh on economic growth,” Mr Kiatipong Ariyapruchya, the World Bank’s senior country economist, said in an interview. “Many firms and households in the sectors hit hard by the pandemic remain vulnerable. This has implications on macroeconomic and financial stability.”

Household debt has soared, in part due to the populist policies of past governments including those of Thaksin Shinawatra and his sister Yingluck as well as the military-backed administrations that removed them in coups.

https://www.straitstimes.com/business/e ... -car-loans

[buksida]

Household debt ratio climbs to 104% in Q4
Thailand's household debt including informal loans has reached 104% of GDP, which is expected to pressure economic growth going forward, according to a report released by a private sector panel.

A study carried out by Chulalongkorn University, commissioned by the Joint Standing Committee for Commerce, Industry and Banking (JSCCIB), indicates Thailand's household debt-to-GDP ratio reached 104% in the fourth quarter of 2024. The calculation included informal loans.

On average, informal debt per household amounted to 98,538 baht.

Notably 40% of Thailand's households have informal debt, either as creditors or borrowers, said Kobsak Duangdee, secretary-general of the Thai Bankers' Association, after a JSCCIB meeting on Wednesday.

According to Mr Kobsak, high household debt levels pose a challenge to Thai economic growth.

https://www.bangkokpost.com/business/ge ... -104-in-q4

Related: Bad loans mar lending gains
https://www.bangkokpost.com/business/ge ... ding-gains

[STEVE G]

It seems that Thai banks are learning:

Thailand car production down 20% in 2024
Domestic sales down 26% to 15-year low, due mainly to credit squeeze

“Car loan rejection rates have jumped to 70%,”

https://www.bangkokpost.com/business/mo ... 20-in-2024

[wenshidi]

How Did Thailand's Middle Class Get So Deep In Debt? | Asia's Changing Middle Class | Insight




This is an interesting subject, but I am not a fan of CNA. Therefore, any alternate perspectives would be most welcome.

[Bamboo Grove]

Thanks wenshidi, I found this very interesting. I was in Bangkok for five days during the Chinese New Year and had a chance to meet my old friends and ex-students there. Particularly, my Indian friend whom I have known since the mid 90's was talking about a big slow-down in the Thai economy. In the 90's he was an employee in and Indian garment company and later started his own business. He told me about the good years in the early 2010's and how everything has slowed down now. Luckily he's been able to put enough money aside.

Also one of my ex-students whose family owns a factory told me how business has been slow for some years already and how she is losing sleep over that. I would consider these both examples to be upper middle-class but still facing the same problems in the future as the people in the documentary, although my Indian friend has probably been able to save enough money for a comfortable living, particularly as his daughter has only a couple of years left in the university.

Now, if the middle-class is facing such big problems, what about the working class? I noticed that the prices, particularly in BKK had gone up a lot from my days in Thailand. I moved away in 2008. I understand that it is still possible to buy reasonably priced food if you know where to go for it but the prices in restaurants have gone up remarkably.

[STEVE G]

I sometimes have suspicions that corruption indirectly has an effect on household debt in Thailand in that a substantial number of the middle classes working for the Government, local authorities, police, military etc flaunt unearned wealth and then others end up borrowing money to try and match their lifestyle.

[wenshidi]

What Bamboo says is true. I was amazed at how many department stores are still open, but at the same time, upmarket shopping centres also have racks of second hand clothes at the same time.

This all seems to be especially true in HH. Lots of generational wealth, currently funded by a dwindling line of retirees who will disappear almost entirely in the next few years. Lots of Ladies of lunch today, but what about the demographics tomorrow and the year after? Sadly, HH seems about as LT healthy as HK.

[buksida]

Interesting documentary, it appears that a lot of the debt burden is on millennials and gen-Zs spending too much on lavish lifestyles that are way beyond what they're earning. Social media could have a lot to do with that also as they all try to 'out show' each other. The bit about traveling was interesting and we saw it first hand over the weekend - car parks for cheap hotels full of million baht SUVs, fancy EVs, and top spec trucks that are all on credit.

It is also way too easy to borrow money here ... in my day, if you couldn't afford something, you saved up for it! Saving is discouraged in Thailand because the banks give you nothing for doing so and you end up paying to leave your money in one where it devalues over time (zero interest/card fees/ATM charges/inflation).

It seems to be a problem that isn't going away and a massive drag on the economy.

[caller]

What Bamboo says is true. I was amazed at how many department stores are still open, but at the same time, upmarket shopping centres also have racks of second hand clothes at the same time.

If youre talking about the 'high end' malls in the main strip, so Siam Paragon, Centrals World, Chit Lom & Embassy, Gaysorn, Emdistrict (Emsphere, Emquartiar & Emporium), plus iconsiam and One Bangkok a little further away, these are very tourist dependent, and will only really be affected, if that falls away. They also have the wealthy Bangkokians who like to play there, plus presumably those middle classes not in debt (I have saved the film, but not looked at it yet).

I was at The Mall Bang Kapi, which is their biggest store - it's massive - on Saturday, and it was packed to the rafters. Really hard to find a parking space, even valet parking was full. Even my other half, who works for the company, was shocked, but it turned out there was some sort of event going on as well, that was also drawing everyone in. I came away with a pair of skechers from a 'pop-up sale', as did Pam, and I also bought a new watch strap. Filled up at a proper Gourmet Market, bought some snacks from the myriad food stalls outside of the supermarket, then escaped!

And yet, other malls are struggling, Gateway, at Ekkamai, has never really recovered from Covid, and some specialist shops based there, that I liked to visit, all disappeared, never to return. I never go there now, because of those shops closing.