Debt reaches 11-year high

Debt reaches 11-year high

A man works at an expressway construction site.Household debt for labourers surged in the first quarter. (Photo by Pattarapong Chatpattarasill)
A man works at an expressway construction site.Household debt for labourers surged in the first quarter. (Photo by Pattarapong Chatpattarasill)

Thai workers' debt has surged to the highest in 11 years, driven by higher living costs and easier access to loans.

The latest survey by the University of the Thai Chamber of Commerce (UTCC) had 1,200 respondents whose income is 15,000 baht per month or less. It found 95% of them were in debt.

The survey estimated average debt per household at 158,855 baht, the highest level in 11 years, up by almost 15% from 2018.

Some 86% of respondents have no savings, mostly because of higher debt resulting in increased expenses, rising product prices, and higher housing and car loans.

The majority said they have been quite cautious in their spending.

Thanavath Phonvichai, vice-president for research at the UTCC, said most workers are concerned about the domestic economic slowdown and their overall sentiment remained weak despite the general election.

"Some 80.3% of respondents have defaulted on their debt repayment in the previous 12 months because they spent more than they earned," said Mr Thanavath. "They want the daily minimum wage to increase on par with rising costs for utilities, travel expenses and food prices."

He attributed the uptick to the country's economic slowdown.

"If the domestic economy remains weak, we expect workers will secure more unorganised loans," said Mr Thanavath.

The survey found borrowing from loan sharks made up 41.8% of labourers' household debt this year, up from 34.6% in 2018.

He urged the government was urged to help workers with costs of living via state subsidies and the low-priced Blue Flag programmes.

The UTCC forecast Thai economic growth in the first half to stay in the range of 3.2-3.3%, reaching 4% in the second half.

The full-year projection is 3.5-3.8% this year.

"Growth at the lower end of 3.5% is possible for the year if there is a delay in a new government forming," said Mr Thanavath.

He proposed the government introduce a new stimulus package to build confidence in the second quarter, saying a slowdown will decrease the confidence of consumers, businesses and investors.

The government is being also urged to take care of the baht's strength and improve shipments by boosting border trade and exports.

"If it wants speedy results, the government should come up with short-term measures for tourism and property," said Mr Thanavath.

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