August 24th, 2007, 03:25
Household debt at record level - Commitments surge to 31% of GDP because of economic slowdown
The level of household debt hit an historic high this month - 31 per cent of gross domestic product (GDP) - mainly because the economy has slowed and forced people to borrow more to survive.
The "Chamber Business Poll" reported yesterday that average household debt surged 13 per cent to Bt132,262 year-on-year in August.
The household debt figure was at its highest ever level.
Thanawat Phonwichai, director of the Economic and Business Forecasting Centre at Thai Chamber of Commerce University, said the figure clearly indicated people were having serious cash-flow problems mainly due to the downward economic trend.
The poll also suggests three ways to solve the problem. Firstly, the government should do more to bring the high rate of debt down to below 30 per cent. Secondly, it should restore the economy and hold a general election as soon as possible. Finally, the government should encourage people to save more.
"Rising debt is one of the major factors that will hit the country's economic growth. The problem will lead to a slow-down in investment by the private sector," Thanawat said.
The findings came from a survey of 1,178 respondents nation-wide.
The poll found people have borrowed more this year for daily living expenses, transport costs, investment, healthcare and households.
Debt per capita rose to Bt6,387.50 per month from Bt4,917 per month in August last year.
The survey, conducted from August 10-15, found that 78 per cent of total respondents said they had a debt burden, compared with 75 per cent from last year.
More people were using "underground loans" - 32 per cent, compared with 26 per cent in the same period last year.
Reasons for making household loans included expensive consumer goods, high interest rates and rising oil prices, which increased the strain on their daily spending.
Thanawat said the figure implied people don't have a choice to borrow money from banks because of high interest rates. He said the government must urgently heal the financial system to persuade people to get loans from banks - and support people by providing soft loan credit to prevent them borrowing from loan sharks.
The village fund was the first choice for people to borrow from, accounting for 19 per cent, followed by public banks, commercial banks, non-banks, relatives, friends - and creditors.
The survey also found that 60 per cent of respondents had trouble paying their debts each month, with only 40 per cent saying they had the capability to pay.
People in the North and Northeast had the most trouble paying their loans because most of them were farmers.
Yajai Chuwicha, head of the Chamber Business Poll, said people with lower incomes were likely to have more financial trouble. Those earning less than Bt20,000 a month had the highest demand for loans.
Despite the increasing household debt rate this year, people were still optimistic about their financial future, Yajai said.
Some 61 per cent of respondents said they would have lower debts next year, while 16 per cent expected to have the same amount of debt and 21 per cent said they expected to have more debt.
Source: The Nation, 24.08.2007
Comment:
Before a one popular party took over the regime, Thailand's economy was in fairly good shape. Even the fincance crash 1997/1998 has benn solved. Now there are massive debs - many if the still well hidden and all reserves have been plundered, like Gov Housing Bank, National Rice Founds and others.
The poor farmers are paying the bill again, while a super rich telecom tycoon cashed its checks without paying taxes, runned away with airplane loads of cash and valuables .... and bought a premier football club in UK.
The level of household debt hit an historic high this month - 31 per cent of gross domestic product (GDP) - mainly because the economy has slowed and forced people to borrow more to survive.
The "Chamber Business Poll" reported yesterday that average household debt surged 13 per cent to Bt132,262 year-on-year in August.
The household debt figure was at its highest ever level.
Thanawat Phonwichai, director of the Economic and Business Forecasting Centre at Thai Chamber of Commerce University, said the figure clearly indicated people were having serious cash-flow problems mainly due to the downward economic trend.
The poll also suggests three ways to solve the problem. Firstly, the government should do more to bring the high rate of debt down to below 30 per cent. Secondly, it should restore the economy and hold a general election as soon as possible. Finally, the government should encourage people to save more.
"Rising debt is one of the major factors that will hit the country's economic growth. The problem will lead to a slow-down in investment by the private sector," Thanawat said.
The findings came from a survey of 1,178 respondents nation-wide.
The poll found people have borrowed more this year for daily living expenses, transport costs, investment, healthcare and households.
Debt per capita rose to Bt6,387.50 per month from Bt4,917 per month in August last year.
The survey, conducted from August 10-15, found that 78 per cent of total respondents said they had a debt burden, compared with 75 per cent from last year.
More people were using "underground loans" - 32 per cent, compared with 26 per cent in the same period last year.
Reasons for making household loans included expensive consumer goods, high interest rates and rising oil prices, which increased the strain on their daily spending.
Thanawat said the figure implied people don't have a choice to borrow money from banks because of high interest rates. He said the government must urgently heal the financial system to persuade people to get loans from banks - and support people by providing soft loan credit to prevent them borrowing from loan sharks.
The village fund was the first choice for people to borrow from, accounting for 19 per cent, followed by public banks, commercial banks, non-banks, relatives, friends - and creditors.
The survey also found that 60 per cent of respondents had trouble paying their debts each month, with only 40 per cent saying they had the capability to pay.
People in the North and Northeast had the most trouble paying their loans because most of them were farmers.
Yajai Chuwicha, head of the Chamber Business Poll, said people with lower incomes were likely to have more financial trouble. Those earning less than Bt20,000 a month had the highest demand for loans.
Despite the increasing household debt rate this year, people were still optimistic about their financial future, Yajai said.
Some 61 per cent of respondents said they would have lower debts next year, while 16 per cent expected to have the same amount of debt and 21 per cent said they expected to have more debt.
Source: The Nation, 24.08.2007
Comment:
Before a one popular party took over the regime, Thailand's economy was in fairly good shape. Even the fincance crash 1997/1998 has benn solved. Now there are massive debs - many if the still well hidden and all reserves have been plundered, like Gov Housing Bank, National Rice Founds and others.
The poor farmers are paying the bill again, while a super rich telecom tycoon cashed its checks without paying taxes, runned away with airplane loads of cash and valuables .... and bought a premier football club in UK.