Thai central bank aims to cut household debt to 80% of GDP

[snoop1130]

 

The Bank of Thailand (BoT) is considering four measures to reduce Thailand’s household debt to about 80% of gross domestic product (GDP), down from the current 90.7%, according to Ronadol Numnonda, deputy governor for financial institution stability at the BoT.

 

He attributed the increase in public debt to a series of crises in the last couple of years, including the COVID-19 pandemic, which have plunged many people and businesses into deeper indebtedness.

 

He said that the first measure, to be introduced in January, is responsible lending, under which financial institutions must be cautious and more responsible in extending loans, taking into account the existing household debt of the borrower.

 

Full story: Thai PBS 2023-10-30

 

- Cigna offers a range of visa-compliant plans that meet the minimum requirement of medical treatment, including COVID-19, up to THB 3m. For more information on all expat health insurance plans click here.

 

Get our Daily Newsletter - Click HERE to subscribe

[tomazbodner]

I bet 25 Satang they are not going to reach that target.

[Mike Lister]

Household debt or consumer lending has barely changed, the problem is that GDP has fallen from USD bill 543 to USD 494 bill over the past four years hence the percentage of debt to GDP is higher. 

 

https://tradingeconomics.com/thailand/gdp

[Airalee]

20 minutes ago, Mike Lister said:

Household debt or consumer lending has barely changed, the problem is that GDP has fallen from USD bill 543 to USD 494 bill over the past four years hence the percentage of debt to GDP is higher. 

 

https://tradingeconomics.com/thailand/gdp

Actually it has changed substantially.

 

“According to Surapol Opasatien, CEO of the National Credit Bureau, the current total household debt stands at 17.62 trillion baht”

 

https://www.nationthailand.com/business/banking-finance/40030064#
 

“Household debts have grown by 11.5% this year, and a Thai household is now 559,408 baht in debt, on average. 80.2% of the debt amount may be attributed to formal lending, and 19.8% involves informal lending, according to a NNT report.”

 

https://www.thailand-business-news.com/economics/99401-thailands-household-debt-level-hits-15-years-high

 

 

https://www.statista.com/statistics/1401253/thailand-household-debt-value/

 

 

[Mike Lister]

1 minute ago, Airalee said:

Actually it has changed substantially.

 

“According to Surapol Opasatien, CEO of the National Credit Bureau, the current total household debt stands at 17.62 trillion baht”

 

https://www.nationthailand.com/business/banking-finance/40030064#
 

“Household debts have grown by 11.5% this year, and a Thai household is now 559,408 baht in debt, on average. 80.2% of the debt amount may be attributed to formal lending, and 19.8% involves informal lending, according to a NNT report.”

 

https://www.thailand-business-news.com/economics/99401-thailands-household-debt-level-hits-15-years-high

 

 

https://www.statista.com/statistics/1401253/thailand-household-debt-value/

 

 

 

Yes I agree that overall Household Debt has likely increased but I qualified the term and said, Consumer Lending which is mainly bank and finance house lending. Informal lending is something else entirely and I have no figures on what that 19.8% might really be, neither I suspect does anyone else other than via sampling and estimation. Bottom line is that the only measurable statistics are from Consumer Lending via the official lending route, which is what I intended at the outset.

[Airalee]

Just now, Mike Lister said:

 

Yes I agree that overall Household Debt has likely increased but I qualified the term and said, Consumer Lending which is mainly bank and finance house lending. Informal lending is something else entirely and I have no figures on what that 19.8% might really be, neither I suspect does anyone else other than via sampling and estimation. Bottom line is that the only measurable statistics are from Consumer Lending via the official lending route, which is what I intended at the outset.

You said

 

“Household debt or consumer lending has barely changed”

 

The article is about debt.  It’s simple.

 

But….I’ll give you the benefit of the doubt and we’ll just use the Statista figures for debt and the Trading Economics for GDP.

 

4 years (2019-2022)

 

GDP goes from 544 to 495.     A drop of 9%

 

Debt goes from 13.5 to 15.1     An increase of 11.85%

 

Now….it is your turn to do the math and using those figures, show me the debt to gdp ratio.   Remember….there are 2 different currencies (gdp is in dollars and debt is in baht) and you will also have to account for the change in exchange rates over that period.

 

have fun.

 

 

 

 

[Mike Lister]

2 minutes ago, Airalee said:

You said

 

“Household debt or consumer lending has barely changed”

 

The article is about debt.  It’s simple.

 

But….I’ll give you the benefit of the doubt and we’ll just use the Statista figures for debt and the Trading Economics for GDP.

 

4 years (2019-2022)

 

GDP goes from 544 to 495.     A drop of 9%

 

Debt goes from 13.5 to 15.1     An increase of 11.85%

 

Now….it is your turn to do the math and using those figures, show me the debt to gdp ratio.   Remember….there are 2 different currencies (gdp is in dollars and debt is in baht) and you will also have to account for the change in exchange rates over that period.

 

have fun.

 

 

 

 

I've already agreed that overall debt has likely increased.

 

The only debt that can be accurately measured is that via the official channels. Unofficial borrowing from unauthorised sources such as loan sharks can't be accurately measured hence trying to calculate the percentages you suggest is not possible. But what can be done is consumer lending via the official channels can be measured against GDP, over the past four years, I very much doubt that bank/finance company lending has increased at all during that period. Do I want to prove it, do I want to have fun? I have no need but if you want to, go for it.

[Airalee]

8 minutes ago, Mike Lister said:

I've already agreed that overall debt has likely increased.

 

The only debt that can be accurately measured is that via the official channels. Unofficial borrowing from unauthorised sources such as loan sharks can't be accurately measured hence trying to calculate the percentages you suggest is not possible. But what can be done is consumer lending via the official channels can be measured against GDP, over the past four years, I very much doubt that bank/finance company lending has increased at all during that period. Do I want to prove it, do I want to have fun? I have no need but if you want to, go for it.

The bottom line is that your original post was wrong.  
 

That is why I used the statista numbers which do not include “informal lending” or any other “unofficial borrowing from unauthorized sources such as loan sharks”.  They have other areas where they estimate “shadow economies”

 

But you keep bringing that up.  Obfuscate much?

 

Now….instead of your cherry picked 4 year timeline….try a 5 year or a 10 year.

 

I’ve included a screenshot from your source because

 

1. Most people won’t click on your link and just take whatever you say at face value and

 

2.  The picture shows just how cherry-picked your numbers are.  It’s laughable.

 

 

https://tradingeconomics.com/thailand/gdp
 

 

 

 

 

 

[Mike Lister]

57 minutes ago, Airalee said:

The bottom line is that your original post was wrong.  
 

That is why I used the statista numbers which do not include “informal lending” or any other “unofficial borrowing from unauthorized sources such as loan sharks”.  They have other areas where they estimate “shadow economies”

 

But you keep bringing that up.  Obfuscate much?

 

Now….instead of your cherry picked 4 year timeline….try a 5 year or a 10 year.

 

I’ve included a screenshot from your source because

 

1. Most people won’t click on your link and just take whatever you say at face value and

 

2.  The picture shows just how cherry-picked your numbers are.  It’s laughable.

 

 

https://tradingeconomics.com/thailand/gdp
 

 

 

 

 

 

 

I chose a 4 year period for a reason:

 

https://www.ceicdata.com/en/indicator/thailand/household-debt--of-nominal-gdp#:~:text=Thailand household debt accounted for,86.3 % in the previous quarter.

https://www.xe.com/currencycharts/?from=USD&to=THB&view=5Y

 

 

 

 

 

 

[Mike Lister]

Another aspect of Consumer Debt is that the scope of data collection continues to increase, that doesn't mean that debt is increasing, it just means that more is becoming known about the scope of that debt. Unfortunately, that new awareness alters the headline percentage which causes lots of angst.

 

"The Bank of Thailand (BOT) has improved the coverage of its data on household borrowings or household debt by including new data from: 1) the Student Loan Fund; 2) National Housing Authority; 3) Pico Finance; and, 4) non-savings cooperatives, in order to get a clearer picture of household debt, particularly on borrowings for educational and occupational purposes. Those borrowing for occupational purposes tend to have low and/or irregular income, and their lenders are largely cooperatives. As of 1Q23, household debt outstanding, based on the new dataset, grew roughly by THB766 billion from the THB15.19 trillion that was based on the previous dataset, to THB15.96 trillion, which amounted to 90.6 percent of GDP, down from the 91.4 percent of GDP reported in 4Q22. It is expected that household debt outstanding will continue to decline after peaking at 95.5 percent of GDP in 1Q21".  

 

https://www.kasikornresearch.com/en/analysis/k-econ/economy/Pages/Household-Debt-1QY23-CIS3419-B-04-07-2023.aspx

 

 

[Mike Lister]

The graph on page 4, Figure 2 tells the story I think. YoY Household debt remained flat whilst the Household Debt to GDP climbed.

 

https://www.scbeic.com/en/detail/file/product/7870/g39tauun2f/EIC_NOTE_hh_debt_EN_20211014.pdf

[StayinThailand2much]

3 hours ago, tomazbodner said:

I bet 25 Satang they are not going to reach that target.

 

Yes. Does the 90.7% household debt to GDP figure even include illegal and legal private money-lenders? If the banks stop lending to overly indebted households, guess where people will go instead...

Edited October 30, 2023 by StayinThailand2much

[Airalee]

5 hours ago, Mike Lister said:

 

I chose a 4 year period for a reason:

 

https://www.ceicdata.com/en/indicator/thailand/household-debt--of-nominal-gdp#:~:text=Thailand household debt accounted for,86.3 % in the previous quarter.

https://www.xe.com/currencycharts/?from=USD&to=THB&view=5Y

 

 

 

 

 

 

 

of course you did.  It was your attempt to bolster your ridiculous assumption (which still failed)

 

next

[Mike Lister]

4 hours ago, StayinThailand2much said:

 

Yes. Does the 90.7% household debt to GDP figure even include illegal and legal private money-lenders? If the banks stop lending to overly indebted households, guess where people will go instead...

Banks and other legit legal entities in Thailand are involved in Consumer Lending, that doesn't include private money lending, which when added, gives total household debt. There is simply no way that BOT can measure fully the extent of private money lending, at best this is a an estimate. The fact appears to be that even the BOT does not fully understand what the extent is of Consumer Lending because they keep finding new sources of legit loans and adding those in to the headline figures. 

[Mike Lister]

1 minute ago, Airalee said:

 

of course you did.  It was your attempt to bolster your ridiculous assumption (which still failed)

 

next

The data and the graphs are there for anyone to see, individuals can decide what they think is correct or otherwise. But you and me are done here, you don't  appear to want to debate, rather you want to  impose what you think on others. Bye.

[Mike Lister]

We’ll keep the example very simple, on purpose!

 

If consumer lending (CL) is 10 baht and GDP is 100 baht, CL = 10% of GDP.

But if GDP falls to 90 whilst CL remains the same, CL = 11% of GDP. The CL percentage of GDP appears to have increased but it hasn’t, the base GDP figure against which CL is measured has dropped.

 

In a second example using different currencies:

 

CL = 10 baht and GDP = USD 5 and the exchange rate is 32, CL as a % of GDP = 10 baht / (5*32)% or 6.35%

 

But then the Baht exchange rate weakens from 32 to 38 so CL = 10 baht / (5*38)% or 5.26%. In this example the Baht has weakened which shows CL as a lower percentage of GDP.

 

Next, GDP falls from 5 to 4 so CL = 10 baht / (4*38)% or 6.57%. This fall in GDP shows CL as a higher percentage of GDP yet the value of CL has remained unchanged.

 

Finally, the ex rate reverts to 32 but GDP is still low at 4 so CL = 10 baht / (4*32)% or 7.81%  - (this is where we are headed currently)

 

Ergo

 

Any change in GDP will alter the headline CL percentage, even though the value of CL is flat. The problem is further compounded during periods of exchange rate volatility. If you repeat the above calculations using s constant CL (which the earlier SCB graph suggests) but actual GDP numbers/ex rates, (GDP of USD 544 bill in 2019 and an ex rate of 29.60, versus, GDP of USD 495 bill. In 2022 and an ex rate of 38),  you should get the picture.

 

During the past four years, the USD/THB exchange rate has been extremely volatile, during the past year alone it has moved between 32 and 38. During the past FOUR YEARS, it has moved between 29 and 38, THB is now arguably at the start of a strengthening phase. GDP has also fallen from a high of USD 544 bill. to USD 495 bill.

 

Initially I wrote: “Household debt or consumer lending has barely changed, the problem is that GDP has fallen from USD bill 543 to USD 494 bill over the past four years hence the percentage of debt to GDP is higher”. Later I conceded that total household debt probably has increased although not even BOT seems to understand by how much since most is via unofficial sources. If BOT doesn't know, Trading Economics, Statistica and any other US data agency certainly doesn’t know. The real problem with the headline figure is the fall in GDP and the shifts in the exchange rate.

[retarius]

I wonder how they are going to do that without a) killing the economy or b) driving up gangster usurers' profits.

[kingstonkid]

The late king promulgated the solution.  The problem is that everyone wants the shiny things now.

 

Everyone has to have an iphone or apple tablet.

The high debt is caused by 

 

Lack of financial education

Easy access to credit cards

Belief that the government will bail them out

The Joneses effect

 

Don't be fooled CC don't want people paying on the loan. They want you only paying the interest that is where they make their money.

[Misty]

Article doesn't mention the Bt10k digital wallet initiative being part of the debt solution. I had thought that Bt10k was central bank digital currency (CBDC).  But our staff seem to think that the digital wallet plan is not CBDC but rather courtesy of a private currency owned or controlled by the PM and/or Thaksin, sort of like the scrapped Libra/Meta plan.  Anyone else hearing similar?

[Sydebolle]

Well, it is "cooking the books" classes again anytime soon .......... the tourism promotion board as well as the board of investment have been spilling "good news" all the time. So, in all fairness, what could go wrong? 

[hotchilli]

19 hours ago, snoop1130 said:

The Bank of Thailand (BoT) is considering four measures to reduce Thailand’s household debt to about 80% of gross domestic product (GDP), down from the current 90.7%

Stop lending money to those who cannot repay?

[Purdey]

Keeping in mind the low education levels in Thailand, people who want to borrow money need a free financial advisor in every bank. I understand they could get some advice even now, but perhaps they need someone to write their business plan before lending them money. Banks are partly to blame for lending money to people who will never be able to pay their debt.

[Cake Monster]

22 hours ago, snoop1130 said:

He said that the first measure, to be introduced in January, is responsible lending, under which financial institutions must be cautious and more responsible in extending loans, taking into account the existing household debt of the borrower.

If you want a Loan in many Countries you need to supply a number of Pay Sllps as proof of earnings, as wells a detailed and comprehensive list of outgoings for things like Rent, Electric, existing Loan repayments Etc Etc 

Thailand is entering a stage whereby Loans are being , and have been given without proof of earnings, or by using false information supplied

Despite the rosy picture being painted about NPL, there will surely be a significant rise in this sector or a massive number of Loans placed under Special Mention Status

This high household debt is the main reason the Govt cannot raise Interest Rates which is allowing Inflation to go ever higher, will cause higher borrowing for the Govt

And of course, not to forget that higher Interest Rates will mean higher repayments to borrowers, and many are so near the edge of NPL already

[Cake Monster]

21 hours ago, Airalee said:

Actually it has changed substantially.

 

“According to Surapol Opasatien, CEO of the National Credit Bureau, the current total household debt stands at 17.62 trillion baht”

 

https://www.nationthailand.com/business/banking-finance/40030064#
 

“Household debts have grown by 11.5% this year, and a Thai household is now 559,408 baht in debt, on average. 80.2% of the debt amount may be attributed to formal lending, and 19.8% involves informal lending, according to a NNT report.”

 

https://www.thailand-business-news.com/economics/99401-thailands-household-debt-level-hits-15-years-high

 

 

https://www.statista.com/statistics/1401253/thailand-household-debt-value/

 

 

And the really scary thing

80 % of the debt is unsecured, and is for Vehicles, White Goods , Daily Living on Credit Cards Etc

[circa02]

19 minutes ago, Cake Monster said:

If you want a Loan in many Countries you need to supply a number of Pay Sllps as proof of earnings, as wells a detailed and comprehensive list of outgoings for things like Rent, Electric, existing Loan repayments Etc Etc 

Thailand is entering a stage whereby Loans are being , and have been given without proof of earnings, or by using false information supplied

Despite the rosy picture being painted about NPL, there will surely be a significant rise in this sector or a massive number of Loans placed under Special Mention Status

This high household debt is the main reason the Govt cannot raise Interest Rates which is allowing Inflation to go ever higher, will cause higher borrowing for the Govt

And of course, not to forget that higher Interest Rates will mean higher repayments to borrowers, and many are so near the edge of NPL already

 

It's been like this for years. The lenders are well aware that a lot of the supporting documentation can be questionable, it would kill a lot of their underwriting if the checks were more thorough,  you pop along this weekend to any car showroom or condo sales office to see what i mean about assistance in meeting the alleged eligibility criteria - obviously with your thai partner

Edited October 31, 2023 by circa02

[Mike Lister]

10 minutes ago, Cake Monster said:

And the really scary thing

80 % of the debt is unsecured, and is for Vehicles, White Goods , Daily Living on Credit Cards Etc

If a loan is for a vehicle, it is secured, only personal loans and credit card debt is unsecured. 

[Airalee]

On 10/31/2023 at 12:56 AM, Mike Lister said:

The data and the graphs are there for anyone to see, individuals can decide what they think is correct or otherwise. But you and me are done here, you don't  appear to want to debate, rather you want to  impose what you think on others. Bye.

I post facts which I back up.  You post spin and obfuscation just like you have done under all your other prior screen names which you either ditched after being called out so many times….or were banned.
 

You can feel free to put me on ignore….you always threatened that in the past.  But for some reason….you never do.

 

Replies on a notecard please.

[Photoguy21]

On 10/30/2023 at 4:59 PM, tomazbodner said:

I bet 25 Satang they are not going to reach that target.

I will raise you 1 Baht

[Mike Lister]

1 hour ago, Airalee said:

I post facts which I back up.  You post spin and obfuscation just like you have done under all your other prior screen names which you either ditched after being called out so many times….or were banned.
 

You can feel free to put me on ignore….you always threatened that in the past.  But for some reason….you never do.

 

Replies on a notecard please.

Only you will know what you are talking about here but I'm happy that somebody does!

 

If you wish to debate Thai Consumer Lending and Household Debt levels, I'll try to engage with you, if you don't, that's fine too. But if you want to personalise these discussions, I have no interest in anything you have to say, I imagine your next post will tell me which it is going to be.

 

Now, I gave you a simple and easy to understand example to support what I wrote and I've demonstrated how CL as percentage of GDP changes, based on changes to GDP levels and based on volatile exchange rates. You on the other hand have posted a link and screen shot showing data that can't possibly be known, data that increases almost uniformly YoY......hint, lending amounts do not behave that way YoY! I've also posted a link to SCB confirming what I wrote and that CL's as a percentage of GDP do indeed change, based on the rise and fall of GDP. Finally, I've also provided commentary from BOT demonstrating that even they do not understand the full extent of Consumer Debt and they keep adding to it, as new types of consumer debt are discovered.

 

Edited November 1, 2023 by Mike Lister

[Airalee]

55 minutes ago, Mike Lister said:

Only you will know what you are talking about here but I'm happy that somebody does!

 

If you wish to debate Thai Consumer Lending and Household Debt levels, I'll try to engage with you, if you don't, that's fine too. But if you want to personalise these discussions, I have no interest in anything you have to say, I imagine your next post will tell me which it is going to be.

 

Now, I gave you a simple and easy to understand example to support what I wrote and I've demonstrated how CL as percentage of GDP changes, based on changes to GDP levels and based on volatile exchange rates. You on the other hand have posted a link and screen shot showing data that can't possibly be known, data that increases almost uniformly YoY......hint, lending amounts do not behave that way YoY! I've also posted a link to SCB confirming what I wrote and that CL's as a percentage of GDP do indeed change, based on the rise and fall of GDP. Finally, I've also provided commentary from BOT demonstrating that even they do not understand the full extent of Consumer Debt and they keep adding to it, as new types of consumer debt are discovered.

 

The lady doth protest too much methinks