The latest Bank of Thailand household loan data reflects signs of more prudent borrowing in 3Q21, in line with the economic situation still hit by the COVID-19 pandemic, despite Thai households taking on more debt. As of 3Q21, Thailand’s outstanding household debt stood at THB14.35 trillion, up by 4.2%YoY, but slowed from the 5.1%YoY increase in 2Q21. Notably, the rise in household debt in 3Q21 coincided with the increase in GDP, resulting in a stable household debt-to-GDP ratio in 3Q21 of around 89.3%, unchanged from 2Q21, while home loans still accounted for a large portion of household debt. KResearch views that the increase in household debt in 3Q21 differs from the previous quarter, as more signs of increasing debt to enhance liquidity and/or support daily expenses were seen. The increase in household debt was driven by the rising of home loans, credit card and personal loans, and business loans, due to the third wave of COVID-19 pandemic.
As to the trend of Thailand’s household debt, the ongoing COVID-19 pandemic may lead to greater caution in incurring new debt by residents and the household sector. KResearch expects that outstanding household debt will continue to grow in 2022, but at a level close to the economic growth. Therefore, the household debt-to-GDP ratio will remain in the range of 90-92% of GDP in 2022, likely up slightly from the 90.5% projected for 2021. However, the COVID-19 situation remains a factor to be closely monitored. For Thai households with debt burden, the issue remains to balance expenses and income to maintain debt repayment ability, and to contact financial institutions when facing difficulties to obtain appropriate assistance measures such as debt restructuring.
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