BANGKOK — Thailand’s household debt ratio has fallen below 90% of GDP for the first time in three and a half years, while unemployment figures show over 414,000 Thais remain jobless, with highly educated individuals making up the majority of the unemployed, according to the National Economic and Social Development Council (NESDC).
In a report on Thailand’s social conditions for the third quarter of 2024, NESDC Secretary-General Danucha Pichayanan revealed that household debt decreased to 89.6% of GDP in the second quarter, down from 90.7% in the previous quarter.
The total household debt stands at 16.32 trillion baht ($471.5 billion), showing a slower growth rate of 1.3% compared to 2.3% in the previous quarter.
Employment Challenges Persist
The employment situation remains stable, with approximately 40 million people employed, showing a slight decrease of 0.1% compared to the same quarter in 2023. The unemployment rate rose marginally to 1.02% from 0.99% in the previous quarter, representing about 414,000 unemployed individuals.
Of particular concern is the rise in long-term unemployment, with 81,000 people jobless for more than a year – a 16.2% increase from the previous year. Among these individuals:
- 65% reported difficulty finding work
- 71.3% had never been employed before
- Nearly three-quarters were aged 20-29 years
Banking Sector Response
Commercial banks have tightened their lending criteria due to declining loan quality. This has led to the first contraction in household lending by commercial banks, which accounts for 38.5% of total household debt, shrinking by 1.2%.
Rising Non-Performing Loans
The credit quality situation continues to deteriorate, with non-performing loans (NPLs) reaching concerning levels:
- 9.6 million accounts are in default
- Total NPL value exceeds 1.16 trillion baht ($335 billion)
- NPL ratio increased to 8.48% from 8.01% in the previous quarter
- Car loans and housing loans are the main contributors to NPL growth
Informal Debt Concerns
The tightening of formal lending channels has raised concerns about households turning to informal loans or loan sharks. A 2023 household economic survey revealed:
- Shark loans totaled 67 billion baht ($1.9 billion)
- 47.5% of informal loans were for daily consumption
- Interest rates in the informal sector can reach as high as 240% annually
“To improve the household debt situation, we need targeted measures, especially for crucial debts related to life security such as housing loans, car loans, and business loans,” said Danucha.
He added that new measures, including potential adjustments to the Financial Institutions Development Fund (FIDF) contribution rates, are expected to be announced soon.
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