Thailand’s Economic Growth Hindered by Bad Debts in Housing
Thailand’s economic growth is being hindered by a significant amount of bad debts in the housing sector, according to recent reports. The country’s economic cabinet has directed the Finance Ministry and the Bank of Thailand to urgently address the issue of household debt, particularly in areas such as housing, cars, motorcycles, credit cards, and student loans.
Finance Minister Pichai Chunhavajira highlighted the severity of the situation after a meeting chaired by Prime Minister Srettha Thavisin on July 15. Household debt in Thailand currently stands at THB13.6 trillion (US$372 billion), accounting for 90% of GDP. Approximately THB1 trillion of this debt is classified as bad debt, with a significant portion linked to housing and cars.
To combat the rising bad debt in the housing sector, the Government Housing Bank has been instructed to extend the home loan repayment period for borrowers up to a maximum age of 85. This move aims to alleviate the financial burden on homebuyers facing high expenses and living costs. Additionally, commercial banks will be urged to assist struggling borrowers by extending debt periods and reducing principal payments.
In the case of bad debts related to cars and motorcycles that have already been repossessed, provisions will be made, and the total debt amount will be reported in upcoming meetings. The issue of credit card debt, which currently affects 1.4 million cardholders and is expected to rise, will also be addressed. The Bank of Thailand will work with credit card companies to reduce the minimum payment from 8% to 5%, with further adjustments planned.
These measures are part of the government’s efforts to manage and reduce bad debt swiftly, with the ultimate goal of aiding the economy in its recovery process. By tackling the root causes of the economic downturn, Thailand hopes to see positive changes and a gradual return to growth.
