In 3Q17, Thailand's household debt fell from 78.4 percent of GDP – as recorded in 2Q17 – to 78.3 percent of GDP, which could be the result of a smaller increase in outstanding household debt relative to growth in overall economic activity (the nominal GDP) – which is progress that has been ongoing for some time.
Although the above scenario has painted a picture of an improving trend in household debt, some sub-groups in the populace remain heavily in debt and have thus become very careful in their spending. These findings are partly derived from a survey conducted within Bangkok Metropolis by KResearch at the end of 2017. Of the total survey respondents, 78 percent were found to have “at least” some kind of financial debt; further, 35.6 percent of those with outstanding balances in personal debts said that their monthly installments have increased. The survey was conducted in Bangkok where unemployment and farm produce price volatility have had a smaller impact, but there are still some noteworthy issues being confronted. For example, among those with a debt service ratio (DSR) of over 40 percent, most have debt burdens incurred from more than two loan products – versus those with a DSR below 40 percent who tend to have debt burdens from fewer sources, averaging 1.66 loan products – being mostly credit card loans and large retail loans, e.g., mortgages and auto loans. In addition, the DSRs of Gen-Y respondents were found to usually be higher than the average DSR of surveyed respondents overall. However, there are signs that they are exercising more positive behavior now, and greater caution toward incurring new debts, which is a direction hoped for by related authorities toward reducing household debt over the long term.
During 2018, KResearch expects that the household debt-to-GDP ratio may fall to 77-78 percent of GDP, given that the annualized value of the nominal GDP could grow at a faster pace than household debt. However, household debt has continued to inch upward, and this may reflect the fact that indebtedness remains a sensitive issue for many households, in particular, those having a large variety of liabilities, as well as younger workers who have begun to borrow earlier than older generations. To tackle these structural issues, cooperation between numerous parties will be required.