Thailand caught in a cycle of low GDP growth and high household debt

Thailand’s household debt remains worryingly high at almost 91 per cent of gross domestic product (GDP) as of the third quarter of last year, due largely to a debt overhang since COVID-19 hit the country in 2020.  Corporate debt was almost as high at 87.4 per cent of GDP in the same period, given the rising number of firms making low profit.   

Piti Disyatat, secretary of the central bank’s Monetary Policy Committee (MPC), argues that a policy rate cut will not help much as around 40 per cent of household debt, such as mortgage loans, have a fixed interest rate, while half of business loans also have a fixed rate.

A lower rate of interest could encourage people to take on more debt, adding to a cumulative debt burden later, he said.

The MPC kept the interest rate low for a long period since 2014, and that policy is considered as one of the factors that contributed to rising…