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Thailand’s region-topping household debt ‘a financial illness’, cure will be painful: Analysts
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While the water would eventually drain away, what was left in its wake was a wave of debt, as people borrowed to survive and rebuild. And that debt has still largely failed to subside to this day.
Analysts point to this devastating and destructive moment in Thailand’s modern history, in combination with multiple other economic and political strategies converging at the same time, as a major reason why the country’s economy is caught in a sluggish loop.
Thailand has the highest household debt to gross domestic product (GDP) ratio in Southeast Asia, according to a report by the Institute of International Finance in late 2023. At about 90 per cent - and valued at US$482 billion - it ranks only behind South Korea across Asia as a whole, and well above regional neighbours like Singapore (45 per cent), Malaysia (84 per cent) and Indonesia (16 per cent).
Household debt refers to things like mortgages, car loans, credit card debt and student loans. With a ratio of 90 per cent, it means for every US$100 the entire Thai economy produces in a year, households owe US$90.
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For Jack, a teacher in Sa Kaeo, a rural province on the Thai border with Cambodia, loaning money for “something necessary” like a car, motorcycle or washing machine is normal.
“There is no other option but to buy it on a payment plan and be in debt,” said Jack, who declined to give her full name, explaining she had borrowed 300,000 baht (US$8848) from a teacher co-op, an informal lending group.
When including informal lending outside the remit of registered financial institutions - which is common in rural areas - Thailand’s debt ratio ballooned to 104 per cent in the fourth quarter of 2024, based on a study by Chulalongkorn University.
“Household debt is now one of the main structural economic issues in Thailand,” said Sommarat Chantarat, the executive director of Puey Ungphakorn Institute for Economic Research.
“And right now, we are kind of stuck.”
While the water would eventually drain away, what was left in its wake was a wave of debt, as people borrowed to survive and rebuild. And that debt has still largely failed to subside to this day.
Analysts point to this devastating and destructive moment in Thailand’s modern history, in combination with multiple other economic and political strategies converging at the same time, as a major reason why the country’s economy is caught in a sluggish loop.
Thailand has the highest household debt to gross domestic product (GDP) ratio in Southeast Asia, according to a report by the Institute of International Finance in late 2023. At about 90 per cent - and valued at US$482 billion - it ranks only behind South Korea across Asia as a whole, and well above regional neighbours like Singapore (45 per cent), Malaysia (84 per cent) and Indonesia (16 per cent).
Household debt refers to things like mortgages, car loans, credit card debt and student loans. With a ratio of 90 per cent, it means for every US$100 the entire Thai economy produces in a year, households owe US$90.
ADVERTISEMENT
For Jack, a teacher in Sa Kaeo, a rural province on the Thai border with Cambodia, loaning money for “something necessary” like a car, motorcycle or washing machine is normal.
“There is no other option but to buy it on a payment plan and be in debt,” said Jack, who declined to give her full name, explaining she had borrowed 300,000 baht (US$8848) from a teacher co-op, an informal lending group.
When including informal lending outside the remit of registered financial institutions - which is common in rural areas - Thailand’s debt ratio ballooned to 104 per cent in the fourth quarter of 2024, based on a study by Chulalongkorn University.
“Household debt is now one of the main structural economic issues in Thailand,” said Sommarat Chantarat, the executive director of Puey Ungphakorn Institute for Economic Research.
“And right now, we are kind of stuck.”
