Average household debt in the country has reached a 15-year high due to a slower-than-expected economic recovery and high living costs, amid uncertainty over the formation of a new government after May elections, a survey showed on Thursday.
Average debt stood at 559,409 baht in 2023, up 11.5% from the previous year, according to the survey by the University of the Thai Chamber of Commerce (UTCC).
About a third of the people in the country owe a total of 15.96 trillion baht to formal lenders and an estimated 1 trillion baht to loan sharks.
The recovery of Southeast Asia’s second-largest economy has lagged others in the region as the vital tourism sector just started to recover last year from the pandemic, while soft global demand continues to stall exports, which have contracted for nine consecutive months.
Survey respondents thought they would continue to borrow more for at least six months, university president Thanavath Phonvichai said at a a briefing.
“The debt levels should peak in 2024,” he said. “Despite the election, the economic recovery remains unclear, meaning people continue to face economic problems with high living costs and low incomes until early next year.”
Parliament on Tuesday postponed a vote for the next prime minister, delaying the formation of a government and policies to boost the economy.
The economy is expected to grow between 3.0% and 3.5% this year, Mr Thanavath said, adding that the delayed government formation would have more impact on growth next year.
The ratio of household debt to gross domestic product (GDP) stood at 90.6% at the end of March. Policymakers have expressed concerns about the high debt, particularly among low-income earners.
“We still need to monitor the debt service ability of vulnerable groups after signs of deteriorating credit quality, especially low-income earners,” the Bank of Thailand said in a report on Thursday.
The cenral bank has outlined a series of measures that it hopes will bring the household debt ratio down to 80% of GDP.
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