Impact of Household Debt in Thai Economy and Countermeasure

Abstract

Under the rapid change in globalization, it has created an impact toward Thai people’s spending. The overspending essentially caused raising the levels of household debt in Thailand. This article focuses on three issues aiming at studying Thailand’s household debt situation, investigating the
impacts of household debts toward its macro economy, and giving suggestions on having suitable household debt and its benefts. Thailand household debt level is the third highest in Asia, continuing from Australia and South Korea. The household debt to gross domestic product (GDP) expansion rate had continuously increased since 2010 to 2015, and contrary slowed down in 2016 and 2017. From the data and information, the main group of people being in debt is belonged to generation Y, and when comparing by four regions in Thailand, people in the north gained the highest proportion. Moreover, generation Y is the most people created debt default in Thailand. Regarding the effects of Thailand’s household debt toward its economy divided into two different levels. The effects toward microeconomic level refer to the situation of people carrying high debt without ability to pay off. Besides, they cannot access to any new fnancial resources, and fnally being in problem even they become already in the retirement period. For the effects toward macroeconomic level, the overspending possibly makes the lower rate of saving and debt defaulting, in which create an impact toward the country fnancial institutions, and consequently stimulate higher inflation and being a barrier to the  country’s productivity improvement. The suggestions given as being in debt somehow is beneft to the debtors if it comes with fnancial disciplines. It should be needed debt when people want to invest and facilitate the process to get more incomes. Adopting the philosophy of suffciency economy would lead people achieving life with disciplines. Furthermore, government could issue the strict countermeasure such as monetary policy to support economic mechanisms, using Debt Service Ratio (DSR) policy control debtors, and adopting state welfare in order to create a new consumer group with higher purchasing power.