Household debt in Thailand slows in Q3, but remains a risk

The relationship between the household debt and Thailand’s gross domestic product dipped to 86.8% in the third quarter, from 88.1% in the previous quarter, as the economy continued to recover.

However, the ratio remains one of the highest in Asia, with the amount of debt rising to 14.9 trillion baht ($431.51 billion) at the end of September, from 14.76 trillion baht at the end of of June.

The Governor of the Bank of Thailand, Sethaput Suthiwartnarueput, stated earlier in the month that the high level of household indebtedness could disrupt the economic recovery and should be reduced to sustainable levels.

High debt was cited as one of the reasons why the BOT has not raised interest rates aggressively while the economic recovery was slow.

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The BOT has raised its official interest rate a total of 75 basis points since August, up to 1.25%, to curb inflation and guarantee the continuity of the recovery. The next monetary policy review will take place on January 25, when most economists expect a further gradual rate hike.

The BOT forecasts growth of 3.2% this year and 3.7% in 2023. Last year’s growth of 1.5% was one of the slowest in the region.