As the economy of Thailand improved further in the third quarter, household debt as a percentage of GDP fell to 86.8% from 88.1% in the second quarter.
Total debt rose from 14.76 trillion baht (US$431.51 billion) at the end of June to 14.9 trillion baht (US$431.51 billion) at the end of September, putting it among Asia’s highest debt to GDP ratios.
Earlier this month, Governor of the Bank of Thailand (BOT) Sethaput Suthiwartnarueput warned that excessive household debt was threatening to derail the country’s economic recovery unless it was reduced to more manageable levels.
The BOT’s reluctance to raise interest rates rapidly despite a sluggish economic recovery has been mostly attributed to the country’s high debt levels.
In order to slow inflation and sustain the economic recovery, the BOT has increased its key rate from 0.75% to 1.25% since August. On January 25, after its next policy review, most economists anticipate another another modest increase in interest rates.
Growth is expected to reach 3.2% this year and 3.7% in 2023, according to the BOT. The region’s weakest growth in 2016 was 1.5 percent.