29-8-2023 (BANGKOK) Thailand’s household debt is on an upward trajectory, necessitating close monitoring of auto loans and debt from savings cooperatives, according to the National Economic and Social Development Council (NESDC). Secretary-General Danucha Pichayanan conveyed this warning during a press conference on the country’s social outlook for the second quarter of 2023. The data revealed that household debt in the first quarter of the year reached 15.9 trillion baht, reflecting a 3.6% increase. While this growth rate is slightly higher than the previous quarter’s 3.5%, the ratio of household debt to GDP saw a slight decrease to 90.6%.
Mr. Danucha highlighted that the majority of the surge in household debt during the first quarter stemmed from real estate purchases and personal loans, which increased by 5% and 5.3% respectively compared to the previous quarter.
Regarding the overall debt serviceability of households, non-performing loans (NPLs) amounted to 144 billion baht by the end of March, correlating to an NPL ratio of 2.68%. This represents an acceleration from the fourth quarter of 2022 when the NPL ratio stood at 2.62%.
However, there are concerning issues related to household debt that demand attention. Firstly, the risk of bad debt and delinquency in auto loans is expected to continue rising. In the first quarter of 2023, NPLs from auto loans increased by 30.3% compared to the same period last year, while the proportion of special mention loans to total loans also continued to escalate.
Secondly, the demand for loans from savings cooperatives for personal use and debt repayment remains high. The total loans to cooperatives amounted to 940 billion baht, with non-productive loans accounting for 50% of the total.
In addition to the Finance Ministry’s efforts to provide financial literacy and promote responsible borrowing and debt management, a survey indicated that financial literacy and access to financial services among Thai individuals in 2022 had decreased compared to 2020.
In the second quarter of this year, employment figures reached 39.7 million, marking a 1.7% increase compared to the same period last year. This growth is attributed to a 2.5% expansion in non-agricultural sectors. The hotel and restaurant industry experienced an employment increase of 11.7% due to the recovery of the domestic economy and an upturn in international tourism. Similarly, the construction sector witnessed a 6.0% increase, while the manufacturing, wholesale and retail, and transportation and storage sectors saw growth rates of 0.3%, 0.5%, and 1.1% respectively.
Conversely, employment in the agricultural sector contracted by 0.2% compared to 2022, partially due to drought conditions.
The unemployment rate for the quarter stood at 1.06%, equivalent to 430,000 people. This figure is slightly higher than the preceding quarter’s rate of 1.05% but lower than the 1.37% recorded in the same quarter of 2022.
