Thailand’s Household Debt Reaches 104% of GDP, Posing Economic Threat
Thailand’s household debt, including informal loans, has surged to 104% of GDP, raising concerns about its impact on future economic growth. This critical analysis comes from a recent study conducted by Chulalongkorn University for the Joint Standing Committee for Commerce, Industry and Banking (JSCCIB).
The report indicates that the household debt-to-GDP ratio hit 104% in the fourth quarter of 2024, factoring in informal loans. On average, households carry informal debt amounting to 98,538 baht.
Significantly, 40% of Thai households are involved in informal debt, whether as borrowers or lenders. Kobsak Duangdee, secretary-general of the Thai Bankers’ Association, emphasized that high household debt is a considerable barrier to economic advancement.
Despite the challenges, Mr. Kobsak highlighted that informal debt plays a crucial role in providing liquidity, supporting daily expenses and business operations, and helping households navigate financial emergencies.
The study revealed that about 30% of households earning income from the formal economy also depend on informal loans for liquidity management. Mr. Kobsak stated that alleviating informal debt issues requires strategic measures, such as leveraging digital technology.
He suggested, “Creating a database for borrowers, including individuals and SMEs, would enhance their access to financial resources, facilitating better debt management and fostering sustainable economic growth.”
Sanan Angubolkul, chairman of the Thai Chamber of Commerce, also commented that the JSCCIB anticipates Thailand’s GDP growth between 2.4% and 2.9% this year, compared to the 2.8% forecast for 2024.
Expected growth in 2025 is likely to be driven by the tourism sector, with an influx of 39 million foreign visitors and anticipated government stimulus measures in the latter half of the year, according to the panel.
Export growth forecasts have been revised to 1.5%-2.5% for this year, a decline from 4% last year, while inflation is projected to rise to between 0.8% and 1.2%, up from 0.4% in 2024.
Mr. Sanan remarked on the economy’s continued struggles, underscoring the necessity for structural reforms to ensure enduring economic growth.
As the Thai economy is expected to show signs of improvement in the first half of this year, buoyed by positive momentum and government interventions, Mr. Sanan stressed the importance of ongoing support in the latter half to sustain these trends.
He cautioned that discontinuing stimulus measures and implementing proposed tax increases could burden large corporations, further complicating situations for households and SMEs.
