Household debt growth remained subdued in the first quarter of 2024, primarily due to stricter lending criteria implemented by financial institutions, as reported by the National Economic and Social Development Council (NESDC).
According to NESDC’s findings, household debt reached 16.3 trillion baht during this period, marking a growth rate of 2.5%. This growth has decreased from the 3% increase seen in the previous quarter, accounting for 90.8% of the nation’s GDP, down from 91.4% previously.
The slowdown in household debt growth was observed across nearly all loan types, attributed to high existing debt levels and declining credit quality, which prompted lenders to tighten approval standards.
Furthermore, the quality of household loans is on a downward trend. Non-performing loans (NPLs) concerning consumer credit at commercial banks have climbed to 163 billion baht, representing 2.99% of total loans, an increase from 2.88% in the last quarter, marking five consecutive quarters of rising NPLs.
NESDC secretary-general, Danucha Pichayanan, highlighted two significant challenges. Firstly, the immediate need to restructure debt for credit cardholders who are struggling with increased minimum payments from 5% to 8% starting January 2024. This change has led to repayment difficulties for some borrowers. Secondly, the rise of informal lending, particularly via social media, which could lead to excessive debt accumulation among consumers.
The high-interest rates related to informal loans pose a significant risk of unmanageable debt, especially among the youth.
In other economic updates, the NESDC noted a slight increase in the unemployment rate to 1.07% in the first quarter of 2024, affecting approximately 430,000 individuals.
Anticipated future challenges include the urgency for workers to enhance their skills in response to evolving labor market needs.
The World Economic Forum predicts that more than 42% of jobs in the business sector may face automation by 2027.
A survey by Microsoft Thailand indicated that over 74% of Thai executives express reluctance to hire candidates lacking AI skills.
Moreover, the liquidity squeeze experienced by small and medium-sized enterprises (SMEs) and rising economic risks related to employment remain critical areas of concern.
SMEs, which contribute significantly to the workforce, are grappling with liquidity challenges, as NPLs reached 7.2% of total loans in the fourth quarter of 2023, nearly doubling compared to the previous year.
Additionally, the cost index for micro and medium-sized businesses has surged, raising the possibility of job reductions.
The state planning unit also pointed out concerns regarding the impact of recent floods on agricultural production and farmers’ livelihoods, with damage reported across 308,238 rai of farmland.
Forecasts suggest that from mid-July to September, 60% to 80% of Thailand may experience thunderstorms, posing a potential threat to agricultural output.
This situation could adversely affect farmers’ incomes, inflate production costs, and hinder their ability to repay debts, according to the NESDC.
