Macroeconomic/NESDC

Chatrudee Theparat

NESDC warned of the trend of non-performing loans in the housing sector, particularly for home loans worth under 3 million baht.

Danucha Pichayanan, secretary general of the National Economic and Social Development Council (NESDC), said household debt in the fourth quarter of 2023 expanded at a slower pace, while the quality of loans deteriorated across all types.

Danucha Pichayanan

Key issues under the focus include monitoring the trend of non-performing loans in the housing sector, particularly for home loans under 3 million baht, and promoting measures to encourage severe persistent debtors to participate in debt resolution programs.

In the fourth quarter of 2023, household debt totaled 16.36 trillion baht, marking a 3 % increase, which indicated a slowdown from the 3.4 % growth observed in the previous quarter. The household debt-to-GDP ratio was 91.3 %, a slight increase from the last quarter.

Household debt expanded at a slower pace for nearly all types of credit, except for credit cards and personal loans, while auto loans contracted.

The agency also said households' ability to repay debt declined across all loan types. Non-performing loans in commercial banks was 158 billion baht, accounting for 2.88 % of total loans, up from 2.79 % in the previous quarter.

The agency reported key issues that need attention included:

1) The rising trend of non-performing loans in housing credit, particularly for home loans under 3 million baht, which typically belong to middle- or lower-income households. Monitoring and restructuring the debt for this group is essential to mitigate the risk of bad debt;

2) Accelerating financial institutions to promote debt resolution measures to severe persistent debtors, which was enforced since April 1, 2024. Effective communication and tailored solutions for individual debtors are crucial for the success of these measures, ensuring benefits for all parties involved.

Key issues regarding household debt that need attention include: 1) The rising trend of non-performing loans in housing credit, particularly for home loans under 3 million baht, which typically belong to middle- or lower-income households. Monitoring and restructuring the debt for this group is essential to mitigate the risk of bad debt; 2) Accelerating financial institutions to promote debt resolution measures to severe persistent debtors, which was enforced since April 1, 2024. Effective communication and tailored solutions for individual debtors are crucial for the success of these measures, ensuring benefits for all parties involved.

In a separate development, the agency reported that employment slightly decreased by 0.1%, primarily due to a drop in agricultural employment, while non-agricultural sectors continued to grow. Moreover, average working hours declined, and the unemployment rate stood at 1.01%.

In the first quarter of 2024, the total number of employed individuals was 39.6 million, a slight decreased of 0.1 % compared to the same period last year.

This decline was due to a more than 5.7 % drop in agricultural employment during the off-season. Meanwhile, non-agricultural employment grew by 2. 2 %, with the hotel and restaurant sector expanding continuously at a rate of 10.6 %, driven by the influx of over 9.3 million international tourists. Similarly, the construction sector grew by 5%.

Employment in the manufacturing sector began to improve, increasing by 0.7 %, particularly in the production of beverages, chemicals and chemical products, and textiles. Moreover, the transportation and warehousing sector expanded by 13.4 %. Working hours decreased due to a reduction in overtime, with the overall and private sectors averaging 41.0 and 44.0 hours per week, respectively. The number of people working overtime dropped by 3.6 %, while the number of the underemployed increased by 11.6 %.

The unemployment rate remained stable at 1.01 %, with 410,000 unemployed individuals.