A shocking household debt survey shows that 87.3% are having problems meeting their monthly financial commitments. The issue of household debt is particularly acute in rural Thailand. In cases when harvests fail, households can end up paying 25% interest per month to informal lenders.
A new survey on household debt in Thailand raises questions about the impact of the situation on an economy that already faces external headwinds.
Recent research by the University of the Thai Chamber of Commerce has revealed that household debt in Thailand has increased alarmingly in the last year with each household having a debt of 248,004 baht representing an increase of 13% on the figure for 2014 when it stood at 219,158 baht.
Thailand like many other Asian countries has been experiencing a significant economic downturn with a fall-off in exports, economic activity and growth contributing to a challenging economic environment.
Tough economic environment sees higher levels of Thai household debt as poor seek short term funds
The Thai baht has recently hit a six-year low against the US dollar and while this, it is hoped, will trigger an increase in exports this has yet to materialise.
The survey into household debt was prepared from a poll or opinion survey of 1,200 households in Thailand between August 20th and 28th.
Mr Thanawat Pholvichai Director of the Economic and Business Forecast Centre revealed that out of the average household debt of 248,004 baht, approximately 48.7% of this was organised or structured debt while the rest was informal or unorganised.
In his statement, Mr Thanawat pointed out that the increased household debt reflected economic challenges which have been seen in Thailand for the last three years and which has resulted in the stagnation or decline of household revenue.
Loan repayments for less well off households a big worry for Thailand particularly those in rural areas
In recent years successive Thai governments have taken action to deal with a rampant illegal money lending trade in the country which can see some households being charged rates as high as 25% per month for access to short-term loans or funding.
Other factors causing the increase in household debt range from low incomes or even the inability to find employment, to an increase in the cost of living and in rural areas there have been a number of poor harvests.
It is also reported that Thailand has seen an increase in spending through credit cards as families attempt to provide for education fees for children.
Another key factor which has contributed to the problem is the prevalence of gambling in Thailand particularly among less educated households and increased spending on consumer goods obtained through short-term financing.
Massive rise in 2015 level household debt repayments
The results of the household debt survey are particularly shocking in that they show that 87.8% of those who had borrowed money were experiencing difficulties in servicing their debts and that the average household in Thailand must meet repayments of 14,033 baht per month representing a massive increase on the figure 2014 which was only 10,752 baht per month.
Carla Boonkong is a magazine writer who writes extensively about woman's issues in Thailand. One of her key subjects is the story of Thailand's growing influence in the world and the role played by Thai women in the process. She is now a staff writer with Thai Examiner.com in Bangkok.
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