As expected, household debt at the end of 4Q15 rose to 81.5 percent of GDP, versus 81.1 percent recorded at the end of 3Q15 and 79.8 percent at the end of 2014. The increase in 4Q15 household debt was driven by three factors, 1) yearend spending; 2) expedited auto purchases before the enforcement of a new excise car tax in 2016; and, 3) increased home buying as a result of government property sector stimuli.
During 1Q16, it is expected that household debt will remain stable or increase slightly to 81.5-82.0 percent of GDP, owing to growing mortgage loans prior to the expiration of the real estate stimuli. However, eroding consumer confidence and accelerated debt settlements around the 2015 yearend may cause credit card and other personal loans, as well as auto-financing, to decline. Loans extended to households will likely be driven mostly by specialized financial institution performance in response to the government stimuli.
For 2016, we at KResearch maintain our view that household debt will eventually reach 83.0-84.0 percent of GDP due to a favorable mortgage growth outlook and an expected recovery in consumer loans beginning from 2Q16. However, close attention must be paid to Thai economic performance vis-à-vis export growth, the severity of drought and continuity in public investment because those factors will affect household confidence towards making loan drawdowns and accessing to capital later on.