Thailand Experiences Slower Growth in Household Debt, Citing Stricter Lending Rules

[snoop1130]

 

The growth rate of household debt in Thailand has slowed down in the first quarter of this year. The main cause of this slowdown is the stricter loan lending criteria set by financial firms. According to an announcement from the National Economic and Social Development Council (NESDC), household debt reached 16.3 trillion baht. This signifies a growth increase of 2.5%, a drop from the 3% growth seen in the previous quarter. The debt level is equivalent to 90.8% of the Gross Domestic Product (GDP), a decrease from the earlier 91.4%.

 

Nearly all kinds of loans have seen a deceleration in household debt growth. This can be attributed to the already high household debt and deteriorating loan quality which has led to stricter approval processes by lending institutions.

 

Danucha Pichayanan, the Secretary-General of NESDC, has noted an increase in non-performing loans(NPLs) with the amount now standing at 163 billion baht. This represents a rise from 2.88% to 2.99% and marks the fifth consecutive quarter increase in NPLs.

 

According to Pichayanan, the main issues are the urgent need to restructure the debt of credit card holders struggling after the Bank of Thailand raised the minimum payment from 5% to 8% since January 2024, as well as informal lending practices which pose a significant risk of uncontrollable debt especially amongst young people.

 

In other news, according to the NESDC, the unemployment rate saw a slight rise reaching 1.07% in the first quarter of this year, which translates to 430,000 unemployed people.

 

Future job market trends suggest a need for employees to adapt their skills due to technological advancements. For example, the World Economic Forum predicts that over 42% of business sector jobs will be automated by 2027.

 

With liquidity issues amongst small and medium-sized enterprises (SMEs) and increasing economic risks, employment is also being affected, as well as farmers' incomes due to recent floods damaging agricultural land and increasing production costs.

 

File photo for reference only

 

-- 2024-08-27

 

 

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[hotchilli]

12 hours ago, snoop1130 said:

The growth rate of household debt in Thailand has slowed down in the first quarter of this year. The main cause of this slowdown is the stricter loan lending criteria set by financial firms.

Which is a good thing, it's been a longtime coming.

But it has the negative affect that people can't buy everything they did before, hence the drop in spending power and businesses witnessing a drop in sales.

Better to get to the root cause and solve the long term issue.

[Srikcir]

14 hours ago, snoop1130 said:

The main cause of this slowdown is the stricter loan lending criteria set by financial firms.

Might also the lack of any collateral or sustainable income be a cause?

[john donson]

loansharks rubbing their hands even warmer