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Thai household debt levels to rise even further - central bank governor


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Thai household debt levels to rise even further - central bank governor

 

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FILE PHOTO: Bank of Thailand Governor Sethaput Suthiwartnarueput speaks during his first briefing on the economy and monetary policy after taking office in Bangkok, Thailand October 20, 2020. REUTERS/Chalinee Thirasupa

 

BANGKOK (Reuters) - Thailand's household debt levels, already at the highest in 17 years, are expected to rise further, the central bank governor said on Thursday, as the coronavirus pandemic hammers its trade-and tourism-reliant economy.

 

Southeast Asia's second's largest economy suffered its biggest contraction in 22 years in the second quarter and could shrink a record 7.8% this year, the Bank of Thailand (BOT) has forecast.

 

"The pandemic had cut jobs, reducing households' income and debt servicing ability," Governor Sethaput Suthiwartnarueput told reporters.

 

"The employment situation has not yet returned to normal," he said, noting the economy would not get back to pre-COVID levels until the third quarter of 2022.

 

As of June, household debt rose to 13.59 trillion baht ($435 billion), equal to 83.8% of GDP, the highest since 2003 and among the highest levels in Asia.

 

The debt was at 79.9% of GDP at the end of 2019.

 

The Federation of Thai Industries has estimated job losses at a record 2.5 to 3 million this year, of which more than a million are in the tourist sector. Thailand has a workforce of about 38 million.

 

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-- © Copyright Reuters 2020-10-22
 
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Covid triggers jump in Thai household debt

By The Nation

 

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The Covid-19 crisis has driven up household debt as job losses and falling income weaken the ability to make payments, new Bank of Thailand (BOT) governor Sethaput Suthiwartnarueput said on Thursday.

 

Thailand’s household debt jumped this year from 80 per cent of gross domestic product (GDP) in the first quarter to 83.8 per cent in the second quarter.

 

“Falling income caused by the virus impact has contributed to a rise in household debt,” Sethaput said.

 

He explained that although Thailand’s unemployment rate is relatively low, many workers had moved from higher-paying jobs in manufacturing, services and tourism, into agriculture. Many are also working fewer hours. 

 

According to a BOT study, the same debtors account for 80 per cent of Thailand’s household debt over the past nine years. One in five pensioners is in debt, with those aged 61-65 owing an average Bt100,000.

 

More younger people are also entering the borrowing cycle, with 50 per cent of those aged 30-40 now in debt, mostly via personal loans and credit cards.

 

Looking forward, household debt will continue to rise for the next two years, with the economy projected to recover to pre-Covid levels in the third quarter of 2022, he warned.

 

The central bank would launch more measures to deal with long-term problems, Sethaput said, without revealing any details.

 

The BOT has urged banks to continue providing support for companies and individuals struggling with debt when its current measures, including debt-payment suspension, end this month.  

 

The central bank is also keeping a close eye on debt restructuring, added Sethaput.

 

Source: https://www.nationthailand.com/business/30396624

 

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-- © Copyright The Nation Thailand 2020-10-23
 
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Look what it says - the economy is not projected to bounce back till the third quarter 2022.  Yes, that's when travel may get back to normal.  

What's the date right now?  

We have only just begun.  2021 could easily be a complete write-off too.  

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5 hours ago, webfact said:

Covid triggers jump in Thai household debt

By The Nation

 

800_3006abd4efb508f.jpeg?v=1603372908

 

He explained that although Thailand’s unemployment rate is relatively low, many workers had moved from higher-paying jobs in manufacturing, services and tourism, into agriculture. Many are also working fewer hours. 

Source: https://www.nationthailand.com/business/30396624

 

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-- © Copyright The Nation Thailand 2020-10-23
 

I thought the government didn't keep unemployment figures.  Occasionally the employment rate is said to be in the high 90% range yet there is no data to back this up.

 

If the 'government' opened up a scheme for unemployment payments there would be registrations of higher than 50% of the potential workforce.  Yet such a scheme has never been implemented.  No 'government' would admit to such a huge unemployment rate.

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5 hours ago, webfact said:

The central bank is also keeping a close eye on debt restructuring, added Sethaput.

In other words looking at the amount of Loans entering " Special Mention Loans " that have a very real, and high , potential to turn into NPL Loans very quickly.

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18 hours ago, snoop1130 said:

Southeast Asia's second's largest economy suffered its biggest contraction in 22 years in the second quarter and could shrink a record 7.8% this year, the Bank of Thailand (BOT) has forecast.

Yet the baht strength seems to be holding on.

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That really shouldn't surprise anyone. Many "middle class" employees have multiple credit cards whose combined credit limit was already maxed out and could barely be serviced long before the pandemic. Lose your job or even just the usual "overtime" and there's no way to service that debt. Add a financed car to the mix and it's even worse.

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6 hours ago, Blumpie said:

Look what it says - the economy is not projected to bounce back till the third quarter 2022.  Yes, that's when travel may get back to normal.  

What's the date right now?  

We have only just begun.  2021 could easily be a complete write-off too.  

I think travel will be back to normal(ish) far before then.  Tourism won’t bounce back immediately but will take time to grow and additional time for the money to circulate throughout the economy.  
 

Of course, everything at this point is just a wild guess at best.

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