High debt levels in Thailand, especially in households and businesses, are hindering economic recovery from the COVID-19 pandemic. Policy rate cuts are ineffective, and debt restructuring and support measures are needed for long-term stability. Economic growth forecasts have been downgraded due to weak exports.
Challenges of High Debt Levels in Thailand
Thailand faces significant challenges due to high levels of debt among households and businesses, exacerbated by increasing non-performing loans. The COVID-19 pandemic has further strained the situation, with many households experiencing income losses while still having to repay loans and mortgages. Despite government stimulus measures, consumer confidence and demand remain low, hindering economic recovery.
Impact of High Household and Corporate Debt
Household debt in Thailand is nearly 91% of GDP, with corporate debt also alarmingly high at 87.4% of GDP. This debt burden hampers consumption, savings, and investment, affecting both households and businesses. The high debt levels pose risks to financial stability and economic growth, particularly in sectors hit hard by the pandemic, like tourism and exports.
Effective Strategies for Debt Restructuring
To address the challenges posed by high debt levels, Thailand needs a comprehensive strategy that balances short-term relief with long-term reform. This strategy should include enhancing debt restructuring mechanisms, strengthening financial regulation, promoting financial literacy, and implementing structural reforms to boost productivity and competitiveness. The central bank’s measures, such as debt restructuring programs, aim to provide support to debtors and prevent the escalation of non-performing loans, essential for Thailand’s economic recovery.
Source : As Household Debt Skyrockets, Thailand’s Economy Worsens – Thailand Business News
