Thai households are dealing with the highest level of debt in 16 years thanks to prolonged Covid-19 outbreaks and slow economic growth, according to the latest survey by the University of the Thai Chamber of Commerce (UTCC).
The survey, which was based on interviews with 1,350 respondents conducted during Aug 15-20, deemed Thailand's household debt situation as not yet serious because rising debts stem largely from asset purchases.
According to the survey, the average debt per household stands at 501,711 baht this year, up by 3.7% from 483,950 baht in 2020.
The figures represented the highest level in the 16 years the survey has been conducted. There was no survey in 2021.
"Some 99.6% of respondents were in debt, which was incurred mainly from personal loans and credit cards as their income stagnated while expenses increased, driven by higher costs of living," said Thanavath Phonvichai, president of the UTCC.
"People's borrowing objectives were for daily expenses, purchases of durable goods such as houses and vehicles, and doing business."
According to Mr Thanavath, despite the rising household debt rate hitting a 16-year high, most household debts were formal or organised, reflecting that Thais remain capable of borrowing from financial institutions.
It is considered a normal condition for middle-income earners to borrow more to buy assets, he said.
"Now it's time for the government and private sector to accelerate investments to boost economic growth, which should increase people's income, in lieu of cash handouts," said Mr Thanavath.
"Household debt will improve once the domestic economy recovers to strong growth."
He cited the latest data from the Bank of Thailand that revealed Thailand's household debts totalled 14.6 trillion baht in the first quarter of this year, representing 89.2% of GDP, a slight decrease from the fourth quarter of 2021 when household debt stayed at 90.0% of GDP.
Thai household debt rose to 90.9% of GDP in the first quarter of 2021 because of the pandemic and the government's lockdown measures in February of 2021 to contain the virus spread.
Mr Thanavath said Thailand's household debt is likely to bottom out and gradually decrease in line with the economic recovery.
The ratio of household debt is projected to significantly drop over the next five years if the economy can expand by at least 6.2% per year, he said.
Mr Thanavath predicted the Thai economy to grow by at least 4% in the fourth quarter as a result of robust exports and a recovery in foreign tourist arrivals.
"Exports and tourism are key drivers to propel the country's GDP to grow by 3-3.5% this year," he said.