- April 3, 2018
- Posted by: admin
- Category: Daily News
- Siam Commercial Bank (SCB)’s research house, the Economic Intelligence Center (EIC), has raised a warning flag about a potential re-acceleration in household debt after the household debt-to-GDP ratio at the end of 2017 edged up for the first time in two years.
- But higher household debt at present should not be worrisome as consumer loan growth is largely driven by auto loans and mortgage borrowing by mid- to upper- income segments, where purchasing power remains healthy, he said.
- The research unit’s comments came after the family debt-to-GDP ratio was found to have risen to 77.5% at the end of Dec 17 from 77.3% in the preceding three months. This was attributed to auto-loan growth, in line with the car sales uptick.
- The country’s household debt-to-GDP ratio peaked at 80.8% at the end of 2015, falling to 77.3% at the end of Mar 17. Household debt surged by THB494bn to THB12tr at the end of 2017, from THB11.5tr in 2017.
- The household debt of low-income earners, particularly in the farming sector, remains high, dampening spending in this segment. That, coupled with increased unemployment and declining overtime hours, suggests the current economic expansion is not fully benefiting some segments of the labour market, he said.
- In the meantime, Surapol Opasatien, chief executive of the National Credit Bureau, has sought to soothe jitters, saying the upsurge in household debt could be largely attributed to loans extended by commercial banks and state-owned financial institutions, for which the loan scrutiny process is quite tough.