Thailand’s upcoming general election is set to place a spotlight on the nation’s growing household debt levels, with reports indicating that one in three Thais are currently trapped in debt. The debt burden is expected to be a key issue during the election campaign, as political parties promise measures to tackle the problem.
Thailand has one of the highest household debt to gross domestic product (GDP) ratios in Asia, ranking third behind South Korea and Hong Kong, according to a Bank for International Settlements report. The debt burden can start early in life for many Thais and continue throughout their lifetime. A staggering 58% of people aged 25 to 29 are already in debt, while a quarter of people over 60 still have outstanding loans.
The COVID-19 pandemic has only exacerbated the issue, with the central bank reporting that the number of bad debt accounts has nearly doubled to 10 million. Political parties are offering a range of measures to tackle the problem, including debt moratoriums, guarantee-free loans, and handouts, as well as wage increases. However, analysts have warned that such promises could lead to increased macroeconomic risks.
The central bank is urging the government to take action to reduce household debt levels. It recommends lowering the levels from 86.9% of GDP at the end of 2022 to below 80% to further reduce financial risks. The bank’s concern highlights the severity of the issue, which is expected to be a significant factor during the election campaign.
