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15 Oct 2020

Econ Digest

Although September KR-ECI improved, households remain concerned about debt repayments

The KR Household Economic Condition Index (KR-ECI) in September 2020 stood at 38.1, improved slightly over that reported for August 2020, suggesting that Thai households were more optimistic about their living conditions. The 3-month Expected KR-ECI also increased to 39.7 in alignment with the gradual recovery seen in economic activities after the government lifted lockdown restrictions and introduced a series of measures to stimulate domestic tourism and purchasing power. However, the KR-ECI and 3-month Expected KR-ECI were still below 50 and pre-COVID-19 levels, suggesting that economic conditions and living conditions of households have not returned to normalcy yet.  

 

Components of the KR-ECI also show that Thai households were more concerned about their purchasing power in September 2020 and over the following three months due to the impact of coronavirus (COVID-19) on income and employment. In addition, they were still anxious about debt repayments after the expiration of the first phase of debt relief measures (July 2020) as some households were not able to adapt to the situation or increase their income so that their ability to repay their debts was affected. Another survey conducted by KResearch shows that more than 50% of respondents intended to participate in phase 2 of the Bank of Thailand’s relief measure for retail borrowers, especially debt restructuring programs (such as reducing the minimum rate of interest).  

 

KResearch views that the resurgence of COVID-19 in many countries continues to generate uncertainties over the Thai economic recovery. Such uncertainties have dampened employment, purchasing power and debt servicing ability of Thai households. However, the government’s economic stimulus measures, especially those aimed at stimulating domestic purchasing power, will likely help support household spending during the final quarter of 2020.

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Econ Digest