Bangkok: Thai household debt contracted by 0.1% in the first quarter of 2015, marking the first contraction in recent times. This shift reduced the household debt-to-GDP ratio to 87.4%. Despite this contraction, household credit quality remains an issue, particularly in the sectors of auto hire-purchase loans and credit cards, while the labor market maintained stability in the second quarter amid ongoing evaluations of the impact of US tariffs on the economy.
According to Thai News Agency, Mr. Danucha Pichayanan, Secretary-General of the National Economic and Social Development Council (NESDC), highlighted that this contraction followed a 0.2% expansion in the previous quarter. Commercial banks, being the largest lenders, experienced a contraction for the fourth consecutive quarter, contributing to the decline in the debt-to-GDP ratio from 88.4% in the previous quarter. The repayment capacity of households remains a challenge, with non-performing loans (NPLs) amounting to 1.19 trillion baht. Although the ratio of NPLs to total loans has decreased across most loan types, auto hire-purchase loans and credit card loans remain exceptions.
Mr. Pichayanan also pointed out the complexities involved in addressing household debt, including the rise of informal loans facilitated by online platforms. He emphasized the need to crack down on such informal lending to prevent consumers from accumulating excessive debt through buy-now-pay-later services.
The employment landscape in the second quarter saw the number of employed individuals rise to 39.5 million, showing a slight increase from the same period in the previous year. The unemployment rate dropped to 0.91%, with the number of unemployed persons decreasing to 370,000. While employment in non-agricultural sectors remained stable, the agricultural sector continued to experience contraction. Notably, the transportation/warehousing and hotels/restaurants sectors saw the highest employment growth.
The US remains a significant export market for Thailand, with exports totaling US$17.6 billion, accounting for over 20.6% of Thailand’s export economy. The impact of US import tariffs, including specific and reciprocal tariffs, poses challenges for Thai businesses, necessitating adjustments such as reducing import tariffs on over 10,000 US products to 0%, particularly agricultural goods. This situation could affect competition, employment, and working hours in Thailand. Consequently, the government is encouraged to support market diversification, implement protective measures for Thai products, and address product misappropriation issues.
Additionally, Thailand faces challenges related to border disputes and evolving employment patterns. The country is dealing with a shortage of migrant workers, particularly from Cambodia, where many have returned due to expired work permits. Efforts are ongoing to recruit workers from Myanmar, and the Cabinet has approved a memorandum of understanding to bring in additional workers from Sri Lanka, Nepal, the Philippines, and Indonesia to mitigate the impact on the labor force.