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Thailand's household debt surged to a historic high in Q1/2021. Looking ahead, EIC expects the Thai economy to face a 'Debt Overhang' problem, which could slow recovery in household spending.

Thailand's household debt swelled to a record high at 90.5% of GDP in Q1/2021, the highest among developing countries.



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Thailand's household debt swelled to a record high at 90.5% of GDP in Q1/2021, the highest among developing countries.

 

An increase in household debt to GDP ratio was attributed to growing household debt and stagnant economic rebound, particularly the household incomes, which are suffering from the COVID-19 crisis.

 

High-frequency data reflected that the household's demand for loans remained high due to the need to cover living expenses and declining liquidity during the pandemic. Some households might hinge on informal lending and become exposed to a higher risk of debt default going forward.

 

EIC views that Thailand will likely suffer a so-called 'Debt Overhang' problem where the household debt burden grew so large that it hampers future spending and economic recovery.


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