The Covid-19 crisis has caused household debt to surge to the highest level in 12 years, according to the University of the Thai Chamber of Commerce (UTCC).
The university's latest survey of 1,229 respondents during Nov 18-27 found household debt averaged 483,950 baht per household, up by 42.3% from 340,053 baht during the same period of 2019. The figure in November 2019 was up 7.4% from the corresponding period of 2018. In 2009, household debts averaged only 147,542 baht per household.
Debt has expanded because of the domestic economic slowdown, fuelled by the pandemic, the higher cost of living, job losses and lower incomes.
The survey found household debt also stems from borrowing for general spending, cars, business housing loans, credit card charges and existing debt repayments.
Some 77.4% of the debt is formal debt owed to financial institutions, 2.6% is underground debt owed to loan sharks, and 20% is owed to a combination of formal lenders and loan sharks.
"The household debt ratio is expected to rise to 89-90.9% of GDP in the first quarter of 2021, up from 88% at the end of 2020," said UTCC president Thanavath Phonvichai. "Any recovery is dependent on the government's ability to contain the spread of Covid-19."
According to Mr Thanavath, the slowing economy resulted in lower incomes, with daily wage employees the group at the greatest risk. This group has been forced to rely more on borrowing from loan sharks to cover their daily expenses.
"What concerns people the most is the economy," he said.
"The government has proposed focusing on the cost of living, income disparity, debt restructuring, employment retention, utility bills, debt extension and soft-loan procurement."
Mr Thanavath also urged the government to come up with additional economic stimulus and aid packages for the business sector.
In a related development, the UTCC yesterday reported business sentiment in December fell to a six-month low because of ongoing concerns about the pandemic and the possible reinstatement of lockdown measures, the country's economic prospects, higher retail oil prices, baht appreciation and weak exports. The TCC Confidence Index, which gauges the sentiment of the business sector and members of the Thai Chamber of Commerce in every province, fell to 31.8 from 33.7 in November.
Mr Thanavath said sentiment would likely fall further this month as a new wave of infections emerged. This would derail a recovery, while a strong baht affects export competitiveness. He expects the economy to grow by 2.2% this year, below a previous forecast of 2.8%.