Thailand’s household debt has reached a record high, driven by slow economic growth, declining incomes, and rising living costs, according to a survey released Tuesday by the University of the Thai Chamber of Commerce. The survey found that the average household debt has risen to 606,378 baht, an 8.4% increase from the previous year, marking the highest figure since the survey’s inception in 2009.
The survey, conducted in early September, also revealed that a growing number of households are struggling to service their loans. Of the total debt, 69.9% originated from formal lending sources, a decrease from 80.2% in the previous year. The remaining 30% came from informal lending, which saw an uptick as more households reached their formal credit limits and turned to alternative sources, including loan sharks.
This growing debt burden has weighed heavily on Thailand’s economy, which has been outpaced by its regional peers. The country is grappling with the highest borrowing costs in a decade, weak exports, and a sluggish recovery in key trade partner China.
Thailand’s government and the Bank of Thailand have raised alarms over the nation’s mounting household debt, which reached 16.4 trillion baht, or 90.8% of the country’s gross domestic product (GDP), by the end of March 2024—one of the highest debt-to-GDP ratios in Asia. The central bank has outlined measures aimed at reducing this ratio to 89% of GDP by 2025.
For comparison, International Monetary Fund data from 2022 shows household debt levels in Malaysia at 67% of GDP and Singapore at 48.6%.
The university’s survey of 1,300 respondents, conducted from September 1 to 7, found that a majority of households struggled with debt repayments in the past year and expect similar challenges in the coming year.
“We’ve been dealing with debt issues for a long time, and little progress has been made,” said university president Thanavath Phonvichai during a press briefing. Despite the rising debt, he noted that most household loans were used for daily living expenses, durable goods such as homes and cars, and business activities, indicating that they are not yet severely harming the economy. He expressed optimism that household debt could ease once the domestic economy strengthens.
However, the impact is already being felt in certain sectors. The Federation of Thai Industries recently slashed its domestic vehicle sales target by 200,000 units to 550,000, citing high household debt and stricter lending rules as key factors dampening demand.
Finance Minister Pichai Chunhavajira emphasized the urgency of addressing the country’s debt crisis. He called on the Bank of Thailand to extend assistance to retail borrowers and said he plans to meet with banks to explore further support for debtors.
Prime Minister Paetongtarn Shinawatra, who assumed office in August 2024, has pledged immediate economic stimulus. As part of this plan, the government announced on Monday that it will distribute 145 billion baht to state welfare cardholders beginning next week. This marks the first phase of a “digital wallet” initiative, which is expected to eventually reach 50 million people. However, most of the funds may now be distributed in cash instead of through digital means.
As the country navigates this economic landscape, the government and central bank continue to balance stimulating growth with managing the significant household debt burden.