The exorbitant price Thailand is paying for high household debt

[webfact]

 

The crisis of high household debt is casting a dark shadow over Thai society: over a million people are on the edge of bankruptcy, some have committed suicide or crimes, and many are suffering from mental breakdowns.

 

The problem of high household debt has been hounding the country since the COVID-19 pandemic hit the country in 2020, when the household debt-to-GDP ratio climbed sharply to 90 per cent from 60 per cent in 2010. Currently it remains precariously high at 91 per cent.

 

Household debt totalled a staggering 16.2 trillion baht in the third quarter of 2023, increasing by 3.3 per cent compared to the same quarter last year. The household debt-to-GDP ratio remained stable at 90.9 per cent, unchanged from the preceding quarter, according to Thailand’s Social Outlook for Q4/2023 report released recently by the National Economic and Social Development Council (NESDC), a state think tank.

 

The high debt has enormous social consequences. News media often report stories of people taking their own and family members’ lives as they are unable to extricate themselves from their debt trap.

 

“The number of property crimes and crimes against life, body, and sexuality surged by 25.9 per cent and 15.1 per cent, respectively in the fourth quarter of last year,” according to the NESDC’s social report.

 

The problem with low interest rates

 

Low-interest rates of the past have been blamed partly for encouraging people to borrow more money. Commercial banks and non-banking financial institutions also provided disguised cheap loans to consumers. These financial products often offer zero interest for the first few months but charge higher rates later, or have enticing offers like “travel now, pay later”.

These end up in large personal borrowings, and car hire-purchase loans.

 

Undesirable consumer behavior 

 

On the consumer side, borrowers are urged to be careful about their spending. In the era of social media, the NESDC pointed to the rising impact of influencers boosting consumption. They often lure people to spend on meals, cars, and vacations, encouraging their followers to consume products and services beyond their means.

 

By Thai PBS World’s Business Desk

 

Full story: Thai PBS 2024-03-16

 

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[Lee65]

Yet the 10k baht handout explicitly prohibits its use to pay off debt.  Some things are sacred.

[TroubleandGrumpy]

And who was saying many years ago that it was not a good idea to allow Somchai borrow money to buy a new truck?  Educated Thais and Expats. But no one listened and those making money were happy, and the Junta Govt said the economy was growing - what the problem? 

And who is now saying it is not a good idea to allow certain people in for 90 days without a Visa just for short term economic gains? Educated Thais and Expats. But no one is listening and those making money off them are happy, and the Govt is saying the economy is growing - what the problem? 

And on and on and on it goes - year after year, issue after issue. The inevitable end result is coming. Vietnam and Malaysia are eating Thailand's breakfast and Philippines is moving to get involved - soon they will all move on to the Thai lunch - and when they hit the Thai's dinner, it will be all over. And then it will be - what happenned? And then it will be a revolution.  Maybe that is what is needed here. 

 

[Rampant Rabbit]

Only  one person to blame here, the borrower and their total  inability to manage their money. Must have latest, insert phone , car, clothes, shoes, drink blah blah, you made your  problem, knuckle  down pay it  off dont repeat.

[hotchilli]

2 hours ago, webfact said:

The problem of high household debt has been hounding the country since the COVID-19 pandemic hit the country in 2020, when the household debt-to-GDP ratio climbed sharply to 90 per cent from 60 per cent in 2010. Currently it remains precariously high at 91 per cent.

It started long before that.

[blazes]

Since 1945, most Asian nations have experienced some kind of "revolution" (whether in war or by throwing off an imperial yoke).

 

But Thailand?  Nada.  Zero. Zilch.

Nothing has happened to fundamentally change the way "business" is conducted in Thailand. 

 

Looking at all the other Asiatic experiences, I find it difficult to see why revolutionary tendencies (whenever and wherever they have arisen) should be so easily repulsed in this country.

[Thingamabob]

'Over a million people are on the edge of bankruptcy'. Over 10 million plus more like.

[Srikcir]

Remember this from July 2022:

"Big Read – Household debts solution team set to propose ways to resolving the elephant in the room" 

https://www.thaienquirer.com/42047/

In June 2022 General Prayut PM since 2014) appointed a committee (Committee on Debt Resolution of the People) headed by Supattanapong to look at ways to resolve this issue. This committee was tasked with looking for ways to find effective solution to the household debt situation "in all dimensions and every credit portfolio." (my bold)

And here we are in 2024Q1 debt worsening further with no viable solutions yet. Criminal negligence comes to mind.

[sandyf]

3 hours ago, Rampant Rabbit said:

Only  one person to blame here, the borrower and their total  inability to manage their money. Must have latest, insert phone , car, clothes, shoes, drink blah blah, you made your  problem, knuckle  down pay it  off dont repeat.

Indeed, Thais are taking lessons from a major economy.

 

Key information about United Kingdom Household Debt: % of GDP

• United Kingdom household debt accounted for 84.6 % of the country's Nominal GDP in Sep 2023, compared with the ratio of 84.9 % in the previous quarter.
• UK household debt to GDP ratio is updated quarterly, available from Mar 1987 to Sep 2023.
• The data reached an all-time high of 108.5 % in Mar 2010 and a record low of 55.6 % in Mar 1987.
• https://www.ceicdata.com/en/indicator/united-kingdom/household-debt--of-nominal-gdp#:~:text=United Kingdom Household Debt%3A % of GDP,-1987 - 2023 | Quarterly&text=United Kingdom household debt accounted,Mar 1987 to Sep 2023.

[oustaristocrats]

5 hours ago, webfact said:

 

The crisis of high household debt is casting a dark shadow over Thai society: over a million people are on the edge of bankruptcy, some have committed suicide or crimes, and many are suffering from mental breakdowns.

 

The problem of high household debt has been hounding the country since the COVID-19 pandemic hit the country in 2020, when the household debt-to-GDP ratio climbed sharply to 90 per cent from 60 per cent in 2010. Currently it remains precariously high at 91 per cent.

 

Household debt totalled a staggering 16.2 trillion baht in the third quarter of 2023, increasing by 3.3 per cent compared to the same quarter last year. The household debt-to-GDP ratio remained stable at 90.9 per cent, unchanged from the preceding quarter, according to Thailand’s Social Outlook for Q4/2023 report released recently by the National Economic and Social Development Council (NESDC), a state think tank.

 

The high debt has enormous social consequences. News media often report stories of people taking their own and family members’ lives as they are unable to extricate themselves from their debt trap.

 

“The number of property crimes and crimes against life, body, and sexuality surged by 25.9 per cent and 15.1 per cent, respectively in the fourth quarter of last year,” according to the NESDC’s social report.

 

The problem with low interest rates

 

Low-interest rates of the past have been blamed partly for encouraging people to borrow more money. Commercial banks and non-banking financial institutions also provided disguised cheap loans to consumers. These financial products often offer zero interest for the first few months but charge higher rates later, or have enticing offers like “travel now, pay later”.

These end up in large personal borrowings, and car hire-purchase loans.

 

Undesirable consumer behavior 

 

On the consumer side, borrowers are urged to be careful about their spending. In the era of social media, the NESDC pointed to the rising impact of influencers boosting consumption. They often lure people to spend on meals, cars, and vacations, encouraging their followers to consume products and services beyond their means.

 

By Thai PBS World’s Business Desk

 

Full story: Thai PBS 2024-03-16

 

- Discover how Cigna Insurance can protect you with a range of visa-compliant plans that meet the minimum requirement of medical treatment. For more information on expat health insurance click here.

 

Get our Daily Newsletter - Click HERE to subscribe
 

 

" In the era of social media, the NESDC pointed to the rising impact of influencers boosting consumption. They often lure people to spend on meals, cars, and vacations, encouraging their followers to consume products and services beyond their means."

 

Yes, good point. It is time to ban these influencers, commercially driven, greedy people, thinking they have a celeb status, above the law, whereas they are just nothing, 'non-valeur' to society.  They belong in the same category as loan sharks. It is only the folks fault and own mistake to look and listen to them, more of a weakness, like an addiction. We should always ask ourselves: why are they talking so nicely ? and this is only for their own benefit, satisfying their greed.

[Cake Monster]

2 hours ago, hotchilli said:

It started long before that.

Thailand's Household Debt issues did indeed start way before Covid.

The occurrence of Covid did not cause a massive spike in borrowing

However, the Junta in charge did

They openly allowed the Financial Institutions to lend money that had a very high risk of default,

This was a policy that enabled the Economy to function without tanking.

Covid has long since finished, but the excuse is being used to cover the sheer incompetence of the previous Government.

The most scary part of all the Money borrowed is the fact that 80 % of it has been lent with little or no security upon it, unlike many other Countries that have high Household Debt that is secured against the likes of Property

 

 

 

[hotchilli]

43 minutes ago, Cake Monster said:

Thailand's Household Debt issues did indeed start way before Covid.

The occurrence of Covid did not cause a massive spike in borrowing

However, the Junta in charge did

They openly allowed the Financial Institutions to lend money that had a very high risk of default,

This was a policy that enabled the Economy to function without tanking.

Covid has long since finished, but the excuse is being used to cover the sheer incompetence of the previous Government.

The most scary part of all the Money borrowed is the fact that 80 % of it has been lent with little or no security upon it, unlike many other Countries that have high Household Debt that is secured against the likes of Property

 

 

 

A very accurate post... a lot of truth in what you have written

[Rampant Rabbit]

1 hour ago, sandyf said:

Indeed, Thais are taking lessons from a major economy.

 

Key information about United Kingdom Household Debt: % of GDP

• United Kingdom household debt accounted for 84.6 % of the country's Nominal GDP in Sep 2023, compared with the ratio of 84.9 % in the previous quarter.
• UK household debt to GDP ratio is updated quarterly, available from Mar 1987 to Sep 2023.
• The data reached an all-time high of 108.5 % in Mar 2010 and a record low of 55.6 % in Mar 1987.
• https://www.ceicdata.com/en/indicator/united-kingdom/household-debt--of-nominal-gdp#:~:text=United Kingdom Household Debt%3A % of GDP,-1987 - 2023 | Quarterly&text=United Kingdom household debt accounted,Mar 1987 to Sep 2023.

yeah but its  not  about the "rest of  the world"

[Mike Lister]

1 hour ago, Cake Monster said:

Thailand's Household Debt issues did indeed start way before Covid.

The occurrence of Covid did not cause a massive spike in borrowing

However, the Junta in charge did

They openly allowed the Financial Institutions to lend money that had a very high risk of default,

This was a policy that enabled the Economy to function without tanking.

Covid has long since finished, but the excuse is being used to cover the sheer incompetence of the previous Government.

The most scary part of all the Money borrowed is the fact that 80 % of it has been lent with little or no security upon it, unlike many other Countries that have high Household Debt that is secured against the likes of Property

 

 

 

68% is unsecured, but that includes credit card and personal lending.

 

Bangkok Post, 15 Sept, 2023, "Debt Problem Getting Worse".

[NoshowJones]

5 hours ago, hotchilli said:

It started long before that.

Did it not get gradually worse since the soldiers staged an illegal coup in 2014. the baht got stronger and is only recently starting to get weaker. These soldiers have a lot to answer for and their leader is prancing about a free man, while many are shouting for Thaksin to be ojailed. At least Thaksin was elected by the electorate as was his sister and the country was a lot better then than it is now.

[Tropicalevo]

7 hours ago, Rampant Rabbit said:

Only  one person to blame here, the borrower and their total  inability to manage their money

You are assuming that they have money and a steady income stream.

Wrong Assumption.

[hotchilli]

12 hours ago, NoshowJones said:

Did it not get gradually worse since the soldiers staged an illegal coup in 2014. the baht got stronger and is only recently starting to get weaker. These soldiers have a lot to answer for and their leader is prancing about a free man, while many are shouting for Thaksin to be ojailed. At least Thaksin was elected by the electorate as was his sister and the country was a lot better then than it is now.

Thaksin was a better leader  and yes he was elected, as was his sister, the military thought they could do better but have driven Thailand to the edge of bankruptcy.

So many lost their livelihoods during Covid, due to their archaic measures, driving them to borrow and into debt.

Srettha now is on a global mission to find anyone who can invest in Thailand, while the only income is from tourism and the notorious sex trade.

But re-electing Thaksin, his sister or daughter is not going to help, Thailand needs new blood and a new future.

But that is as we speak under threat as the establishment try to kill-off the opposition yet again... MFP

[Rampant Rabbit]

11 hours ago, Tropicalevo said:

You are assuming that they have money and a steady income stream.

Wrong Assumption.

Maybe if  they saved it  instead of  spending it, is  my assumption. Dont see any Thais without a  phone, or motorbike, or iced drink, alternative bicycle/walk/water. 

The steady income stream, well out  in the boon ies this is what many do............work a few  days then buy beer, dont work a few  days, rinse repeat. 90+% make their own poverty

Edited March 17 by Rampant Rabbit

[Mike Lister]

3 minutes ago, hotchilli said:

Thaksin was a better leader  and yes he was elected, as was his sister, the military thought they could do better but have driven Thailand to the edge of bankruptcy.

So many lost their livelihoods during Covid, due to their archaic measures, driving them to borrow and into debt.

Srettha now is on a global mission to find anyone who can invest in Thailand, while the only income is from tourism and the notorious sex trade.

But re-electing Thaksin, his sister or daughter is not going to help, Thailand needs new blood and a new future.

But that is as we speak under threat as the establishment try to kill-off the opposition yet again... MFP

The reality is in fact the opposite.  Yingluk spent all the cash on support programs for the poor and left a liquidity deficit for the Military government, one of the worst deficits the country has seen. That was why they performed so badly for the first two years, there was no money. There's an BP article on this somewhere out there with a wonderful graphic showing fiscal performance of all the PM's over the past twenty years.

[sandyf]

15 hours ago, Rampant Rabbit said:

yeah but its  not  about the "rest of  the world"

No, it never is for the majority of this forum.

For many Thailand lives in Isolation to the "rest of the world" and only they are open to derogatory comment.

They are an emerging economy learning from world leaders so the "rest of the world" has a significant bearing on the the matter, irrespective of what you want to think.

[bamnutsak]

23 hours ago, webfact said:

“The number of property crimes and crimes against life, body, and sexuality surged by 25.9 per cent and 15.1 per cent, respectively in the fourth quarter of last year,” according to the NESDC’s social report.

 

Yikes!

 

That is a significant increase.

 

 

[BritManToo]

17 hours ago, Cake Monster said:

The most scary part of all the Money borrowed is the fact that 80 % of it has been lent with little or no security upon it, unlike many other Countries that have high Household Debt that is secured against the likes of Property

In western countries almost no personal debt (outside mortgages) is secured against property.

Edited March 17 by BritManToo

[Rampant Rabbit]

32 minutes ago, sandyf said:

No, it never is for the majority of this forum.

For many Thailand lives in Isolation to the "rest of the world" and only they are open to derogatory comment.

They are an emerging economy learning from world leaders so the "rest of the world" has a significant bearing on the the matter, irrespective of what you want to think.

its  not  about what I think its  about following the forum rules, unless of course those rules  have now been changed, which they may have as it appears something else we cant discuss  has had a big  overhaul.

Edited March 17 by Rampant Rabbit

[Dmitry2222]

On 3/16/2024 at 10:14 AM, TroubleandGrumpy said:

And who was saying many years ago that it was not a good idea to allow Somchai borrow money to buy a new truck?  Educated Thais and Expats. But no one listened and those making money were happy, and the Junta Govt said the economy was growing - what the problem? 

And who is now saying it is not a good idea to allow certain people in for 90 days without a Visa just for short term economic gains? Educated Thais and Expats. But no one is listening and those making money off them are happy, and the Govt is saying the economy is growing - what the problem? 

And on and on and on it goes - year after year, issue after issue. The inevitable end result is coming. Vietnam and Malaysia are eating Thailand's breakfast and Philippines is moving to get involved - soon they will all move on to the Thai lunch - and when they hit the Thai's dinner, it will be all over. And then it will be - what happenned? And then it will be a revolution.  Maybe that is what is needed here. 

 

There are people who work on a rotational basis. They have good money and few months holidays. So, it is not a bad opportunity to allow them to spend earned money in the Thailand.

[Srikcir]

On 3/16/2024 at 10:28 AM, webfact said:

The problem of high household debt has been hounding the country since the COVID-19 pandemic hit the country in 2020

To be fair to former PM Prayut, the increasing debt issue goes back to 2014 when he overthrew the elected Yingluck government and held office into 2023:

March 5, 2023

"Political parties can no longer evade household debt crisis facing Thailand"

https://www.thaipbsworld.com

"Thailand’s household debt has seen a sharp increase over the past 10 years from 59.3 percent of GDP in 2010 to 86.9 percent in the third quarter of last year." (my bold)