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Thailand’s household debt in Q1 2021 is highest in 18 years – Kasikorn Research

Thailand’s household debt in the first quarter of 2021 increased to 14.13 trillion baht, representing 90.5% of gross domestic product (GDP), compared to 89.4% of GDP for the fourth quarter of last year, and is at its highest in 18 years, when the Bank of Thailand started collecting data on household debt in the country, according to the Kasikorn Research Centre of Kasikorn Bank.

It attributed the rise to three types of borrowing, namely housing debt, business debt and debt to fund consumption.

Housing debt increased by 55.3 billion baht from last year’s fourth quarter, coinciding with the increase in sales of housing units in the 1-3 million baht and 3-5 million baht per unit price ranges. The buyers are regarded as having high or moderately high income who have not been badly affected by the COVID-19 pandemic and can still afford to pay the instalments.

Business debt increased by about 40 billion baht, as business operators experience liquidity problems and have to secure loans to carry on with their businesses.

Debt from consumption increased by 33.5 billion baht, as many households currently have insufficient income to meet their expenses, forcing them to borrow.

Kasikorn Research Centre conducted a survey of the debts and savings of people in and around Bangkok in March, which is before the third wave of pandemic, and in June. The results show that 59.6% of the respondents said their income has become unstable after June, compared to 56.2% in March, and the debt service ratio (DSR) for June is 46.9%, compared to 42.8% in March.

79.5% of the respondents are not sure whether their debt problem will improve in the second half of the year, while 26.6% accept that their debt problem will get worse.

45.3% of household debts are credit cards and personal loans, while leasing accounts for 25.3% and 14.3% for housing.

Debtors of banks and non-bank institutions, representing 1.69 million bank accounts, sought financial help in April, compared to 1.68 accounts in March, accounting for 12.4% of small debtors.

Household debt for this year is projected to increase 4.1%, to 90-92% of GDP, compared to last year’s 89-91% of GDP.

Source: Thai Public Broadcasting Service (Thai PBS)

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