Household debt dropped for the third consecutive quarter in 3Q16 to 81 percent of GDP, versus 81.3 percent recorded for 2Q16, due perhaps to decelerating growth in retail loans overall. Although 3Q16 outstanding household debt increased QoQ by 98.1 billion, that growth slowed steadily to 4.1 percent YoY, representing the lowest quarterly growth data since 2004.
For 2016, it is expected that household debt may have increased to 81.5 percent of GDP, which would be lower than the figure reported at the end of 2015. This shows that household debt is subdued now, thus easing concern somewhat towards the stability of the overall financial system.
Looking into 2017, household debt may be within 80.5-81.5 percent of GDP (if GDP growth is 3.3 percent), though outstanding household debt may increase to 4.0-5.0 percent, versus the 3.6 percent pace projected for the end of 2016. However, the 2017 ratio of household debt ratio may be lower than during 2016, thanks to improving GDP growth (as a divisor of household debt to GDP ratio), supported partly by the government economic stimuli and investment, as well as rising commodity prices, especially global oil prices. Retail loans that will drive up household debt include home loans, consumer credit and auto hire purchase loans. Major lenders to households in 2017 will inevitably be commercial banks, specialized financial institutions and savings cooperatives. Non-bank financial institutions will also have a greater role even though many such lenders had previously vanished from the scene over recent years.