According to the Bank of Thailand (BOT)'s latest report on loans extended to households in 2Q21, outstanding household debt increased to THB14.27 trillion, amounting to 89.3 percent of GDP. That figure represents a decline from the 90.6 percent of GDP, its highest in 18 years, reported for 1Q21, because the Thai economy during 2Q21 grew at a faster rate than growth in household debt. Nevertheless, KResearch assesses that the decline in the household debt to GDP ratio during 2Q21 may only be short term, and does not mean that concern over household debt has eased yet.
During the remainder of 2021, KResearch assesses that Thailand's household debt to GDP ratio will likely resume growth. It may approach the upper band of our household debt forecast at 90-92 percent of GDP as household debt remains high, and some households may have incurred more debt in early 3Q21. Meanwhile, gradual easing of COVID-19 lockdown measures, higher vaccination rates, and substantial progress seen in reopening the country may benefit the overall economy, and bolster household income in the near future. However, the debt servicing ability of many retail borrower segments may not return to normalcy within 2021.
Therefore, pressing ahead with the implementation of urgent measures to offer liquidity for cash-strapped borrowers, and debt restructuring to curb NLPs will still be needed for the time being. Presently, relevant organizations, including the BOT, commercial banks, and other financial institutions, are in the processing of assessing appropriate measures, and/or adjusting their financial relief measures. Such efforts are to ensure that their financial relief measures are in line with the economic context and status of individual debtors while also helping address debt problems in a sustainable manner, thus benefiting both borrowers and creditors.