Thailand's Household Debt-to-GDP Decline Fuels Optimism

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Thailand's household debt-to-GDP ratio is expected to fall more rapidly than previously forecasted, as per the Bank of Thailand's latest financial stability report. This progress is attributed to ongoing debt reduction initiatives and a newly introduced debt relief scheme.

 

The report notes a significant decline, with the ratio dropping to 89.6% in the second quarter of 2024 from 91.3% at the end of 2023. Despite reaching lower levels, Thailand's debt ratio still towers over regional figures like Malaysia's 66.5% and China's 62%.

 

The improvement owes much to the "You Fight, We Help" initiative, launched recently to alleviate financial burdens by slashing monthly payments and mortgage interest. However, the central bank warns that rapid debt reduction amidst stagnant income levels could lead to liquidity issues, potentially stifling consumer spending and economic growth.

 

 

Growing financial vulnerabilities among households and SMEs have been highlighted, with worries about asset quality declines among at-risk borrowers. Particularly, small and micro SMEs face financial strain, with many struggling to cover interest expenses. Conversely, some large corporations are curbing new debt due to high existing levels, though they maintain repayment capacity.

 

The business sector's debt-to-GDP ratio fell to 86.5% from 89.9% as observed during the pandemic peak. Despite concerns over potential financial strain, the overall financial system remains robust, with no signs of an emerging asset price bubble. This stability ensures a solid foundation for Thailand's future economic expansion.

 

-- 2025-01-06

 

 

[hotchilli]

Whitewashing the problems doesn't mean it's gone away

[jippytum]

False Dorn. A temporary  resbite  caused by the Phue Thai givaway