Households Become More Cautious in Assuming Debts Outstanding Household Debts Grew at Slower Rate in 3Q21 (Business Brief No.3961)

The latest report on household lending shows that Thai households continue to incur more debts, albeit at a slower pace in line with economic conditions that are being affected by the COVID-19 pandemic. In 3Q21, outstanding household debts stood at THB14.35 trillion, an increase of approximately 4.2 percent YoY, down from the 5.1 percent YoY growth reported for 2Q21. Noticeably, the rising 3Q21 household debts was almost on par with an increase in the value of economic activity. As a result, the household debt to GDP ratio remained static at approximately 89.3 percent, which was on par with  that reported for 2Q21.

Generally, household debts primarily comprise home loans, but KResearch has found that the nature of household indebtedness during 3Q21 differed from that seen during the preceding quarters due to the fact that the debts incurred by households were intended to bolster their liquidity and/or facilitate daily expenses because the third wave of COVID-19 that persisted into 3Q21 may have affected the financial status of many household segments.

Looking ahead, it is expected that the protracted COVID-19 pandemic will cause low-income earners and households to become more careful in assuming more debts. This leads KResearch to project that outstanding household debts will continue to grow at almost the same rate as economic growth (if risks stemming from COVID-19 are limited). Given this, we maintain our 2022 forecast for the household debt to GDP ratio at 90-92 percent. However, it may increase slightly over the 90.5 percent projected for 2021. Close attention must still be paid to the COVID-10 pandemic because the household debt to GDP ratio for 2022 may increase over our prior estimate if it takes longer to control COVID-19. An immediate challenge for indebted households is to maintain a balance between their expenses and income so that they have sufficient funds to service their debts. If they experience any problem, they are advised to quickly seek appropriate assistance from financial institutions, such as debt restructuring, in order to stay afloat during these difficult times.