1Q17 Household Debt-to-GDP Down for Fifth Consecutive Quarter to 78.6% (Business Brief No.3688)

Household debt, as reported by the Bank of Thailand (BOT), increased to THB11.48 trillion at the end of 1Q17, up 3.1 percent YoY. This figure, however, represented a steady decline in line with the Household Debt-to-GDP ratio that fell for the fifth consecutive quarter, as expected, to 78.6 percent in 1Q17, bettering the 79.8 percent reported at the 2016 yearend, given that the Thai GDP (at current prices) grew faster than debt and there was a significant proportion of debt settlements by households in early 2017.

We at KResearch have thus revised downward our projection for the Household Debt-to-GDP ratio by the 2017 yearend to 78.5 percent, or within 78-79 percent, because GDP growth will likely be higher than our previous forecast, while home and business loans undertaken by households are projected to decline faster than previously thought.

Household debt in Thailand over the past two decades since the 1997 financial crisis has grown around 8.3 percent (CAGR), down from the 12.2 percent pace recorded before the crisis. Nevertheless, caution must be observed toward loans for consumption and agricultural business purposes undertaken by households with incomes of less than THB30,000 p.a., because the share of such loans has increased to more than 70 percent of the total household debt, while household savings have declined since household debt began to surge in 2011.

Also, household incomes have increased at a slower pace than debt. Therefore, the government, relevant agencies and financial institutions must join forces to ensure that there is balanced growth in household debt, income and savings to maintain the stability of our households, and with them, our economic and financial systems over the long term.