Household debt has hit a fresh high, particularly among low-income earners, who remain widely exposed to loan sharks, says the University of the Thai Chamber of Commerce (UTCC).
The latest UTCC survey of 1,200 respondents found most of them (64.5%) had average household debt of 188,774.54 baht, up by 12% from a year earlier and compared with 147,542 baht back in 2009.
The annual growth rate has risen overall in recent years _ only 2.8% in 2009 and 2.6% in 2010, jumping to 5.3% in 2011 and 5.7% last year before surging 12% in this year's survey.
The latest surge is attributed mainly to the higher cost of living, rising tuition and purchases of fixed assets such as homes and vehicles.
Thanavath Phonvichai, director of UTCC's Center for Economic and Business Forecasting, said most families have monthly debt repayments averaging 11,671.93 baht, of which 49.6% is in the form of unorganised loans, up from 13.6% a year earlier.
The greatest area of concern is labourers and other low-income earners who normally borrow less than 5,000 baht each, he said.
This group has the most exposure to loan sharks and suffers the greatest difficulty in repaying the debt, particularly after the economy began slowing in April and May.
"The slowdown has weakened their spending power, which is causing a lack of confidence among Thais in their country's economic future," said Mr Thanavath.
But he said the survey found no effect from the slowdown on those earning more than 15,000 baht a month, and their credit card repayment remains well on schedule.
"The survey shows what the government most urgently needs to address right now is low-income earners' cost of living and higher product prices," he said.
The central bank recently said the chief concern is risk to financial stability incurred from the double-digit percentage growth in credit and rising household debt along with downward growth.
The country's household debt surged to 78% of GDP by the end of last year from 63% at the end of 2010 and 44% as of March 31, 2003.
The Bank of Thailand said of the 8 trillion baht in household debt, 3.8 trillion came from commercial banks, 2 trillion from state-owned banks, 1 trillion from savings cooperatives and the rest from loan sharks.
About the author
- Writer: Phusadee Arunmas
Position: Business Reporter