Household debt hits record

The university's August business poll found that the level of household debts hit a record high of Bt2.46 trillion, up 16.55 per cent year on year.

Higher household debt is caused by increasing cost of living and higher prices of consumer goods.

"The figure clearly indicated that people are having serious cash-flow problems mainly due to the fact that these people's incomes do not cover the rising costs of living," said Thanavath Phonvichai, director of the university's Economic and Business Forecasting Centre. The findings came from a survey of 1,232 respondents from August 8-17 nationwide.

The poll found people have borrowed more this year for daily living expenses, transport costs, household expenses, healthcare and investment.

Total household debt accounts for 25.97 per cent of the total gross domestic product. Debt per household rose to Bt135,166 this year from Bt116,681 last year.

Thanavath suggested the government increase people's incomes by boosting economic growth with mega-infrastructure projects so that more jobs are created for a wide range of income groups.

Rising household debt could also lead to a slowdown in investment by the private sector as domestic consumption will slow down, he added.

The poll reported that people who have incomes of less than Bt20,000 a month have to borrow more than higher-income people because of expensive consumer goods, high interest rates and rising oil prices, which increased the strain on their daily spending.

Yajai Chuwicha, head of the Chamber Business Poll, said that more people have started to create debt this year compared with last year, with 45 per cent of total respondents saying they had a debt burden, compared with 21.8 per cent last year.

More people also resorted to "underground" loans - 35 per cent compared with 32 per cent last year.

Saowanee Thairungroj, vice president of the university's research division, said that people also have lower ability to pay debt this year.

More than 55 per cent of respondents said they had more debt compared with income in August this year from only 19.7 per cent in the same period of last year.

The survey also found that 64.5 per cent of respondents had trouble paying their debts each month, with only 35.5 per cent saying they had the ability to pay.

Despite the increasing household debt rate this year, some people were still optimistic about their financial future. Some 31 per cent of respondents said they would have lower debts next year, while 53.5 per cent expected to have the same amount of debt, 12 per cent said they expected to have more debt, and 3.1 per cent said they would have no more debt next year.