Household debt could soar beyond 80% of GDP due to Covid-19 crisis: NESDC

[webfact]

Household debt could soar beyond 80% of GDP due to Covid-19 crisis: NESDC

By The Nation

 

NESDC secretary-general Thosaporn Sirisumphand

 

The Covid-19 crisis has had a massive impact on household debt and it is expected to rise to more than 80 per cent of GDP, the National Economic and Social Development Council (NESDC), a state think-tank, has warned.

 

Thai household debt stood at 79.8 per cent of gross domestic product (GDP) in the first quarter of this year.

 

The pandemic resulted in businesses shutting down in addition to the drought already having hit households hard, leading to increased borrowing of money as incomes declined, NESDC secretary-general Thosaporn Sirisumphand said.

 

The economic impact will be severe in the second quarter, he predicted, as many businesses have laid off workers, or cut their employees' salaries.

 

“The income shock led to continued expansion of consumers loans, growing 7.1 per cent, while the NESDC had predicted it should be lesser,” he said. Consumer loans expanded 7.5 per cent in the fourth quarter of last year.

 

While overall GDP value decreased to Bt15 trillion this year from Bt16 trillion last year, combined with the income shock household debt is expected to surpass 80 per cent of GDP this year, he warned.

 

Consumers also used personal loans for doing businesses, estimated to be 17.9 per cent of total personal loans, which include hire purchase, auto loans and mortgage, he said. Taking this behaviour into account, household debts could be lower, he estimated.

 

Non-performing loans arising from consumption loans is about 3.23 per cent of total consumption loans, up from 2.9 per cent in the fourth quarter of last year. Bad debts amounted to Bt156 billion, he added.

 

Thai household debt totalled Bt13.47 trillion in the fourth quarter of last year, up 5 per cent but down from 5.5 per cent in the pervious quarter. The debt-to-GDP ratio was 79.8 per cent, the highest in 14 quarters. It is expected to surpass 80 per cent of GDP this year.

 

Source: https://www.nationthailand.com/business/30389616

 

-- © Copyright The Nation Thailand 2020-06-15

 

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[Almer]

Could, will or already has.

[owl sees all]

The Farmers Bank had a meeting in the village last week. I believe the meeting was about money not being repaid on time or not at all. Virtually all the village was there. Not enough seats for everyone.

 

They seemed to be intimating that borrowing money to pay them off was the best way forward; according to the wife.

[Cake Monster]

Consumer debt to GDP increases during a recession.

Who is lending all this money out in times of dire straits in the economy.

The only other factor will be a sharp increase in NPL loans which stands at a 3.23% according to this report.

Only a couple of weeks ago another report stated NPL loans were at something like 7.5%

[hotchilli]

39 minutes ago, owl sees all said:

The Farmers Bank had a meeting in the village last week. I believe the meeting was about money not being repaid on time or not at all. Virtually all the village was there. Not enough seats for everyone.

 

They seemed to be intimating that borrowing money to pay them off was the best way forward; according to the wife.

Borrow from Peter to pay Paul... or as Thais call it... Zig Zag, they're good at that!

[ThailandRyan]

Was there any doubt what the outcome would be of shutting down the country or maybe the entire world.  Without most people working the major economic brunt was not only felt by the people but those businesses that support the inner workings of a country itself.  As much as the government here spends on itself it should have terminated the military contracts and used the money to work on the infrastructure and creating jobs.  But go figure, without water for the farmers, food prices increase, crops dry up, and infrastructure projects like dams to capture and store water can not be undertaken.  This BS about giving Thais money for domestic tourism to stimulate the economy is just that BS.

[ubon farang]

Australia The same Household debt has gone through the roof. The carpetbaggers will soon be decending on these cheap homes up for sale Maybe it will happen In Thailand also where people will just leave there homes because they cant afford repayments

[AlfHuy]

that's the so-called official numbers.

How many people have borrowed from loan sharks.

The last 2 weeks alone, I was asked by 2 younger girls if I could help out. I have no connection to them at all.

One girl works at my local Ford garage. She sold me the car.

She send me a message if I could borrow her 5000 baht. I spoke to her and she explained.

She has to take care of her mom and child. She borrowed 25000 from loan sharks and has to pay 2500 baht interest a month (10%).

She is now 2 months behind, does mean, those 5000baht are added and now, she owes 3000baht a months just in interest alone.

Another girl I know from my local restaurant. She has no more money left.

Asked, why they don't ask their friends and family. Answer: They all are in the same situation.

There are hundreds of thousand of people out there who borrow at stupid high interest rates.

Those will never enter the real statistics.

 

No, I have not given any money because once started, this will never end.

I fill for them because working on a very small income which suddenly disappeared over night and not social security.

[KhunKenAP]

Householders are only following the lead set by the Thai Government. 

 

No more problem with the exchange rate, once Thailand is forced to borrow from the IMF. Suggest you keep money in your Thai accounts to the minimum, unless you are running out of toilet paper.

[mommysboy]

Considering it was already 79.8, the economy was already tanking prior to Covid19, and the sheer enormity of the present economic crisis, I would say this prediction is a tad on the shy side.

[CGW]

1 hour ago, KhunKenAP said:

Householders are only following the lead set by the Thai Government. 

People like government, become so much more compliant & easier to control when they owe money! you could suspect that there was an agenda? ????

But that would be silly! ????

[heybuz]

2 hours ago, ubon farang said:

Australia The same Household debt has gone through the roof. The carpetbaggers will soon be decending on these cheap homes up for sale Maybe it will happen In Thailand also where people will just leave there homes because they cant afford repayments

Tell me where the cheap homes are, can't seem to find any.

[ubon farang]

5 hours ago, heybuz said:

Tell me where the cheap homes are, can't seem to find any.

Well try mate where do u want them In Australia or Thailand?

[heybuz]

9 hours ago, ubon farang said:

Well try mate where do u want them In Australia or Thailand?

QLD,,son has been looking for 12 months and prices are rising nobody is looking to sell cheap,he has the cash.

[RichardColeman]

I know a Thai lady married to a farang that runs/ran the pool and bar - generates an income, not big but secure, They also bought another house that they rented out based on the income, whilst renting another near the pool business.

 

The bank have just taken the house, the pool business has just been sold this week for half of what was paid for it and asked. Now they get by on 30k from the old guys pension - which after paying the rent, and kids expenses leave diddly squat

 

They could just have survived on recent years income, but the farang coming started getting less and less, and covid was the final nail in the coffin

 

My point is if this is happening to people slightly 'well-off' , then average farmer joe and factory workers and their families must be about ready to live in a ditch

[kingdong]

42 minutes ago, heybuz said:

QLD,,son has been looking for 12 months and prices are rising nobody is looking to sell cheap,he has the cash.

They will when the worldwide depression kicks in.

[ubon farang]

7 hours ago, heybuz said:

QLD,,son has been looking for 12 months and prices are rising nobody is looking to sell cheap,he has the cash.

Suggestion  The recession will hit hard very soon In both countries. Australian households are swimming in debt. But if it is Brisbane he is looking at that might take a bit longer A couple of interest rate rises should do the trick I fear