Household debt levels to rise further

Household debt levels to rise further

Empty chairs are seen on a beach, which is usually full of tourists, amid fears of coronavirus disease in Pattaya on March 27. (Reuters photo)
Empty chairs are seen on a beach, which is usually full of tourists, amid fears of coronavirus disease in Pattaya on March 27. (Reuters photo)

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.

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