Thai Household debt 86.8% of GDP

[rakman]

Bloomberg article on Thai household debt at 86.8% of GDP, but people not slowing down on taking more debt.

http://www.bloomberg.com/news/2014-12-16/record-thai-household-debt-crimps-rate-cut-room-southeast-asia.html

Not a good attitude of the person interviewed.

Especially at the end:

“I still spend the way I want,” he said. “I am not afraid of rising rates because I can manage by refinancing my debt. There is always a cheap source of funding.”

Glad I'm debt free.

[LawrenceChee]

I am hardly surprised ...I have met many Thais in my years here and a financially savvy one ...there are a few but they are not the norm

Which is always puzzling when you see all the Thais upgrading to the best smartphones ...I am unsure what else they do on them besides Line, Photos and Instagram ...that's a lot of dole to spend on the above !

Blackberry is still king for me but it's 1% of the world saying so now Hahahhah

Edited December 17, 2014 by LawrenceChee

[globalmedia8]

in 1997 the debt to gdp was 47% oh when will this bubble burst?

[12DrinkMore]

in 1997 the debt to gdp was 47% oh when will this bubble burst?

1997 was due to humongous amounts of foreign currency denominated debt, not domestic THB debt.

[empireboy]

Sadly, history teaches us we seldom learn from history!

[Thai at Heart]

in 1997 the debt to gdp was 47% oh when will this bubble burst?

Their is government debt, corporate debt and personal debt.

Which one caused 97?

[Asiantravel]

in 1997 the debt to gdp was 47% oh when will this bubble burst?

Their is government debt, corporate debt and personal debt.

Which one caused 97?

Article from last year

Thailand now has one of the highest household debt-to-GDP ratios in Asia

Thailand’s household debt grew at an alarming 13.6 percent per year since 2008, bringing the country’s household debt-to-GDP ratio to 77 percent from 55 percent, which is up radically from just 45 percent a decade ago. Total lending to Thai households increased at a 17 percent annual rate from 2010 to 2012, while household credit provided by credit card, leasing and personal loan companies rose at a blistering 27 percent annual rate.

Loans to Thailand’s private sector have soared by over 50 percent since the start of 2010:

Surging automobile sales in 2012, courtesy of a first-car tax rebate, has been a significant contributor to the recent increase in Thai households’ debt. The World Bank estimates that the tax breaks cost Thailand’s government $2.5 billion

http://www.forbes.com/sites/jessecolombo/2013/11/04/thailands-bubble-economy-is-heading-for-a-1997-style-crash/

[Arkady]

 

in 1997 the debt to gdp was 47% oh when will this bubble burst?

Their is government debt, corporate debt and personal debt.

Which one caused 97?

 

The problem was corporate debt levels with a lot of it in unhedged foreign currency. Banks also had large amounts of foreign liabilities, both on and off balance sheet. The off balance sheet variety was in the form of guarantees. Thai companies borrowed foreign currency from foreign banks who wanted collateral, usually in the form of land and buildings. Because they could not own the collateral in the event of foreclosure, Thai banks acted as the guarantors for a small fee. That meant that the Thai banks were left holding the bag when the foreign loans ballooned in baht terms and the had the obligation to repay them as guarantors and had to take years taking hold of the collateral through the courts and usually selling it for much less that the value of the loan.

[connda]

My Thai daughter-in-law qualified for a new car loan working as a hostess. Yeah, most of those loans are probably sub-prime to boot. "Look out below" when that bubble pops.

[paddyjenkins]

Anyone remember Courts? They used to be big in the UK and specialize in credit based selling of electronics and furniture, that's their business model.

Well, they're doing well in Singapore for example, but shut down in the UK a long time ago? They also tried to do business in Thailand a few years ago but their credit based model failed and they gave up.

The reason was that unlike their experiences in other countries such as the UK and Singapore, Thais didn't seem to get the bit about paying their debts, they somehow thought they would just take their TVs and sofas etc from the "farang" company and just not pay back the installments they agreed to.

I can't imagine doing business with Thais on anything but a cash on delivery basis, Courts learned that the hard way and my guess is a whole load of other businesses and lenders, both Thai and foreign, are about to relearn the same lesson.

Edited December 17, 2014 by paddyjenkins

[ozyjon]

I'm sure many don't care because the money tree rains money on them, i remember one village girl had 28 foreign boyfriends on the go, i counted them thats how i know, maybe thats why many get into debt, because they know money will eventually arrive (but not from me)

[chris2004]

Sounds like the UK Government, why cut back when you can just borrow more.

[Thai at Heart]

in 1997 the debt to gdp was 47% oh when will this bubble burst?

Their is government debt, corporate debt and personal debt.

Which one caused 97?

Article from last year

Thailand now has one of the highest household debt-to-GDP ratios in Asia

Thailands household debt grew at an alarming 13.6 percent per year since 2008, bringing the countrys household debt-to-GDP ratio to 77 percent from 55 percent, which is up radically from just 45 percent a decade ago. Total lending to Thai households increased at a 17 percent annual rate from 2010 to 2012, while household credit provided by credit card, leasing and personal loan companies rose at a blistering 27 percent annual rate.

Loans to Thailands private sector have soared by over 50 percent since the start of 2010:

Surging automobile sales in 2012, courtesy of a first-car tax rebate, has been a significant contributor to the recent increase in Thai households debt. The World Bank estimates that the tax breaks cost Thailands government $2.5 billion

http://www.forbes.com/sites/jessecolombo/2013/11/04/thailands-bubble-economy-is-heading-for-a-1997-style-crash/

Well 97 was caused by corporates and banks borrowing USD.

Last I looked Somchai isn't buying his car with USD denominated debt and the banks aren't borrowing a boat load of USD nor is the govt. The issue is manifestly different in terms of creating a currency crisis.

[Thai at Heart]

 

in 1997 the debt to gdp was 47% oh when will this bubble burst?

Their is government debt, corporate debt and personal debt.

Which one caused 97?

 

The problem was corporate debt levels with a lot of it in unhedged foreign currency. Banks also had large amounts of foreign liabilities, both on and off balance sheet. The off balance sheet variety was in the form of guarantees. Thai companies borrowed foreign currency from foreign banks who wanted collateral, usually in the form of land and buildings. Because they could not own the collateral in the event of foreclosure, Thai banks acted as the guarantors for a small fee. That meant that the Thai banks were left holding the bag when the foreign loans ballooned in baht terms and the had the obligation to repay them as guarantors and had to take years taking hold of the collateral through the courts and usually selling it for much less that the value of the loan.

So, complteley different to the current situation then.

[Asiantravel]

Their is government debt, corporate debt and personal debt.

Which one caused 97?

Article from last year

Thailand now has one of the highest household debt-to-GDP ratios in Asia

Thailands household debt grew at an alarming 13.6 percent per year since 2008, bringing the countrys household debt-to-GDP ratio to 77 percent from 55 percent, which is up radically from just 45 percent a decade ago. Total lending to Thai households increased at a 17 percent annual rate from 2010 to 2012, while household credit provided by credit card, leasing and personal loan companies rose at a blistering 27 percent annual rate.

Loans to Thailands private sector have soared by over 50 percent since the start of 2010:

Surging automobile sales in 2012, courtesy of a first-car tax rebate, has been a significant contributor to the recent increase in Thai households debt. The World Bank estimates that the tax breaks cost Thailands government $2.5 billion

http://www.forbes.com/sites/jessecolombo/2013/11/04/thailands-bubble-economy-is-heading-for-a-1997-style-crash/

Well 97 was caused by corporates and banks borrowing USD.

Last I looked Somchai isn't buying his car with USD denominated debt and the banks aren't borrowing a boat load of USD nor is the govt. The issue is manifestly different in terms of creating a currency crisis.

Just because we don't have same conditions as last time isn't going to prevent a crisis.

The article said its growing 17% per annum. So next year it will be over 100% of GDP. It's not only the money it is the psychological aspect of people dependent on credit to live the lifestyle they want (not just Thailand) and sooner or later when the bubble bursts a lot of people will find it very hard not being able to have access to such credit

[aTomsLife]

I know there is a huge income gap, with tens of thousands of very wealthy Thais about. But what about the other tens of millions of them?

There's no way the average professional Thai making $12-15,000 (couples $24-30,000) a year, can afford the perpetual expenditures it takes to keep up with the Jones' Somchai's down the soi.

Yet everyone seems to have a late model car (bought at a highly inflated price), smart phones for the kids, and--the big one--real estate.

Maybe I'm missing something. Could very well be the case. Yet I get the feeling something has to give, and will.

[Tongdee]

My Thai daughter-in-law qualified for a new car loan working as a hostess. Yeah, most of those loans are probably sub-prime to boot. "Look out below" when that bubble pops.

A good looking "Hostess" can easily make more income than an "honest" bank manager... ... ...

[Bkungbank]

It's not blame for luxury spending some where inflation on daily spending, still remember when hodling 1,000 Baht many thing were bought back but now not much cooking gas from 350 now 450-480.

Scholl children spend more on uniform ,books ,transportation ,daily food expenses etc which a burden for middle and low income families. Past few years the politic situation making worse for SME business to survive.

We cannot blame others but self finance management, example first car tax free it's easy to buy but monthly installment that makes someone lack understanding of finance management.

[Stef]

FYI, household debt as a percentage of GDP:

Japan: 235%

USA: 124%

Canada: 110%

UK: 95%

Germany: 86%

OECD 2012 data

[Asiantravel]

FYI, household debt as a percentage of GDP:

Japan: 235%

USA: 124%

Canada: 110%

UK: 95%

Germany: 86%

OECD 2012 data

Can you please post the link to the specific source of this information because what you're telling us doesn't correspond with other sources

for example, your claim is that USA is 124% whereas this source shows only 80.57%?

And I would never have expected the Japanese to have household debt that high (whereas government debt has been quoted around those levels?)

http://research.stlouisfed.org/fred2/series/HDTGPDUSQ163N

Edited December 19, 2014 by Asiantravel

[Stef]

FYI, household debt as a percentage of GDP:

Japan: 235%

USA: 124%

Canada: 110%

UK: 95%

Germany: 86%

OECD 2012 data

Can you please post the link to the specific source of this information because what you're telling us doesn't correspond with other sources

for example, your claim is that USA is 124% whereas this source shows only 80.57%?

And I would never have expected the Japanese to have household debt that high (whereas government debt has been quoted around those levels?)

http://research.stlouisfed.org/fred2/series/HDTGPDUSQ163N

You are correct. I mixed up two tables.

[Asiantravel]

FYI, household debt as a percentage of GDP:

Japan: 235%

USA: 124%

Canada: 110%

UK: 95%

Germany: 86%

OECD 2012 data

Can you please post the link to the specific source of this information because what you're telling us doesn't correspond with other sources

for example, your claim is that USA is 124% whereas this source shows only 80.57%?

And I would never have expected the Japanese to have household debt that high (whereas government debt has been quoted around those levels?)

http://research.stlouisfed.org/fred2/series/HDTGPDUSQ163N

You are correct. I mixed up two tables.