Thailand’s household debt declined in the second quarter of this year, reaching 89.6% of GDP compared to 90.7% in the first quarter. This marks the first reduction in over three and a half years, according to Danucha Pichayanan, secretary-general of the National Economic and Social Development Council (NESDC).
While the decrease signals progress, Danucha noted that Thailand’s household debt remains higher than regional averages. He expressed optimism that sustained economic growth could further alleviate the debt burden. The NESDC plans to closely monitor consumption-related household debt, which carries high interest rates and poses risks of a debt trap for households lacking financial discipline.
Consumption debt constitutes about one-third of all household debt, with a significant portion classified as delinquent. This has prompted calls for the Bank of Thailand to enforce responsible lending practices to curb excessive borrowing. However, Danucha cautioned that stricter lending policies by commercial banks might drive borrowers toward informal lenders, exacerbating financial instability.
Data from the Credit Bureau indicates that non-performing loans (NPLs) in the second quarter surpassed 1.16 trillion baht, covering 9.6 million accounts, or 8.48% of total bank lending—up from 8.01% in the first quarter. Mortgages and car loans accounted for the majority of the 12.2% rise in NPLs during this period, with 71% of NPLs concentrated in commercial banks and special financial institutions.
Additionally, Thai households incurred 67 billion baht in informal debt last year, nearly half of which was allocated for personal consumption, underscoring the persistent challenge of unregulated borrowing in the country.
