Macroeconomics / household debt

Chatrudee Theparat

More drastic of lacking liquidity among households in the third quarter of 2023

Increasing by 40.2% in supervised personal debt on using car license car as collateral reflected more drastic of lacking liquidity among households.

Danucha Pichayanan, the National Economic and Social Development Council (NESDC) secretary-general, said statistics on household debt in the third quarter of 2023 showed that more drastic of lacking liquidity among households because an increasing by 40.2% in supervised personal debt on using car license car as collateral.

“The statistics showed more drastic of lacking liquidity because using car licenses as collateral was easy and very quick approval from the banks,” he said.

Mr Danucha said the issues needed to be emphasized include a monitoring the enforcement of responsible lending guideline, addressing problems related to informal debt, as well as the surge in supervised personal debt and the rise in non-performing loans (NPLs).

Household debt was worth 16.2 trillion baht in the third quarter of 2023, increasing by 3.3 % and a deceleration compared to the same quarter last year. However, the household debt-to-GDP ratio remained stable at 90.9 %, unchanged from the preceding quarter.

Most types of loans showed restraint in acquiring debt, except for personal loans. However, loan quality dropped across all categories, NPLs totaling 152 billion baht, comprising 2.79 % of total loans, up from 2.71 % in the preceding quarter.

The agency suggested household debt presents significant concerns to monitor, including the monitoring the implementation of Responsible Lending guideline to address household debt issues, as well as ensuring access to assistance for the persistent debtors; the surge in supervised personal debt which reflected increasing household liquidity challenges; and addressing the issue of informal debt by close monitoring and considering relaxation of lending conditions by relevant government specialized financial institutions.

This approach aims to reduce barriers to lending for debtors outside the formal system, while ensuring continuous monitoring of their repayment capabilities and expanding access to credit, particularly for self-employed individuals with uncertain incomes, who are considered at risk of incurring informal debt in the future.

He said the labor situation in the fourth quarter of 2023 and throughout 2023 continued to improve. The total employed population was 40.3 million, increasing by 1.7 % from the same period last year. Employment in the agricultural sector expanded by 1 %, while nonagricultural sectors increased by 2 %, particularly in the hotels and restaurant sectors with an 8 % growth attributed to a rise in foreign tourists

Working hours showed improvement with the average weekly working hours for the overall and in the private sector were 42.6 and 46.9 hours, respectively. The unemployment rate was 0.81 % which was better than previous year before Covid-19, accounting for 0.33 million people.

For 2023, the employment rate was 98.68 %, surpassing pre-COVID-19 levels, while the overall unemployment rate remained at 0.98 percent, an equivalent to the 2019 level.

He said the topics should be monitored including a progress in restructuring the manufacturing industry as a production for future. As of 2022, the employment structure within the manufacturing industry predominantly relies on unskilled labor, accounting for 43.6 %, a significant increase from 26.2 % in 2017.

Addressing labor shortages, particularly at the vocational and high vocational certificate levels which the share of job applicants to available positions for those degrees is significantly imbalanced, with 6.8 and 7.1 times fewer applicants than vacancies, respectively.

“Fostering the development of AI skill for workers, a vital tool in contemporary business operations. Initiatives for upskilling and reskilling in AI are imperative to cultivate a new generation of workers equipped with relevant AI-related competencies to meet market demands.”