The Bank of Thailand says it wants to see household debt levels below 80% of gross domestic product to help reduce economic and financial risks.
Household debt in the third quarter of last year was 86.8% of GDP, down from 88.1% in the previous quarter, and 90.1% in the fourth quarter of 2021.
Before the Covid-19 pandemic, household debt was 69.2% of GDP.
High household debt has been one reason why the Bank of Thailand has not increased interest rates aggressively, Governor Sethaput Suthiwartnarueput has said.
Given the current economic situation, inflation and interest rates, “we think that by 2027, if nothing is done, household debt will be 84% of GDP”, Ms Suwannee said.
A debt level higher than 80% of GDP could be a drag on economic growth in the long term and pose risk to the country’s financial stability, she said.
The central bank has said it aims to bring down household debt to a sustainable level and plans to issue guidelines to tackle this, including over how to handle existing debt and to offer new responsible lending.
The National Credit Bureau (NCB) said in December that it expected household debt in terms of loan amounts would continue to increase, despite the decline in the ratio to GDP.
It said digital loans and some new financial features were among the factors contributing to a higher volume of household debt.
According to NCB data, total household debt for its financial institution members totalled 13.1 trillion baht in the third quarter of 2022, up from 12.5 trillion a year earlier, or growth of 4.7%.
All four key consumer loan products — comprising credit cards, personal loans, auto loans and mortgages — posted strong growth, it said.
