BANGKOK: Thailand has witnessed one of the sharpest surges in household debt in the region, with the debt-GDP ratio rising from 60% to 85% over the past five years, Krystal Tan, an analyst with Capital Economics, told AFP.
Household debt has reached alarming levels in Thailand which is unbearable for its residents, just one of a welter of issues dragging on the economy despite a vow by the government to revive the kingdom’s fortunes.
“I have more outgoings than income,” Non, a 37-year-old tyre-factory worker tells AFP from his modest family home on the outskirts of Bangkok.”Each month, 30% to 40% of my salary goes solely towards repaying the interest on my loans,” he adds. A resident of a slum area sells food to passers-by at the entry to a slum area along a main road in downtown Bangkok. Thai households are among the region’s biggest borrowers, a credit binge stoked by populist policies and low bank interest rates – but also low wages that keep the poor perilously close to the breadline and make them ready bait for illegal loan sharks.
The debt levels are worrying the generals who seized power last May promising to end a near-decade of political turmoil and restore zip to Thailand’s once-dynamic economy.The country narrowly avoided recession during protests against the ousted administration of former Prime Minister Yingluck Shinawatra, which paralysed government spending and frightened off tourists and investors. Two young men sit on railway tracks as they watch television in a slum area in downtown Bangkok. At the heart of that malaise lies Thailand’s eye-wateringly high household debt.
Analysts tip the government to spend its way out of trouble, despite a vow to tighten the purse strings after what it says were years of profligacy from elected civilian governments.The military has promised to unleash billions of dollars on much-needed infrastructure projects. But the money is yet to kick into the economy.As Barclays Capital put it in a note last month, “the main impediment to growth at present is the slow pace of fiscal spending, which is also delaying investment and consumption decisions. “Earlier this month, the finance minister said he had been told by Gen Prayut to aim for at least 4% GDP growth this year. But the World Bank says growth will only hit 3.5% in 2015 and 4% next year. Already squeezed by months of bad economic news, those at the bottom of the ladder are hoping for an upturn in fortunes.
