The average household debt of Thais this year has risen by a dramatic 20.2 percent, which is officially the highest growth Thailand has seen in the nine years that these numbers have been tracked.
At the end of 2015, the average household debt was THB248,000, but the average debt has already risen to THB298,000 — and the year isn’t even over yet.
Thanawat Pholvichai, director of the University of Thai Chamber of Commerce’s Economic and Business Forecast Center noted that the sharp increase stems from the obligation to pay installments on cars, credit cards, and consumer products.
If only we weren’t such a materialistic bunch and obediently listened to the wise words of the Buddha.
According to Thanawat, household debts tend to increase by an average of THB20,000-30,000 each year, but they jumped up to THB50,000 per household by average this year, reported Thai PBS.
Incentive programs such as the first-time car buyer and homebuyer schemes, which were introduced by Yingluck Shinawatra’s government. are said to be the cause of rising household debt since 2013.
They simply encouraged people to buy things they couldn’t really afford.
Other programs, like the rice-pledging scheme, have been more damaging to personal debt levels by creating expectations of, and expenditures based on, future income that was never realized.
According to Thanawat, the reason why debt shot up so alarmingly was because “the consequences of these policies on household debt remain, and this year’s sluggish economy reduced availability of cash for small-business operations, which further induced borrowing.”
If the government can boost GDP growth to 4% a year, then the ability to repay the household debt of households will rise as well. Most people borrow money in order to help with their business operations to begin with. With the growth of the economy, the need to borrow will eventually subside, reported Bangkok Post.
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