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Adding to the strain, the coronavirus outbreak shut down a small construction company where she worked for $ 10 a day for much needed extra income.
“I am so in debt and don’t know what to do,” said the 51-year-old single mother, mother of two, who traveled from northern Kamphaeng Phet province to join a protest of indebted rice farmers in Bangkok late. last month, asking the government to help reduce their debt burden.
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Jamras has only reimbursed part of the interest since 2013 and has not affected the principle. This year, she has to pay 40,000 baht in interest, but she has no money. “I hope I have some help.”
Such protests have put additional pressure on the Thai government, which is already grappling with growing pro-democracy protests and struggling to revive the economy hit by the pandemic.
Thai households are among the largest borrowers in Asia, racking up a mountain of debt of 14 trillion baht, or 89.3% of gross domestic product (GDP) at the end of December, a sharp rise from 78.1% in 2017. And, they find it increasingly difficult to keep pace with payments.
Household debt levels are the highest since the central bank started keeping records in 2003.
High indebtedness also poses a risk to financial stability and restricts consumer spending in Southeast Asia’s second-largest economy, preventing a recovery from the coronavirus crisis. Last year, the economy suffered its deepest collapse in more than two decades, as exports declined and the vital tourism sector was shaken by the absence of foreign visitors.
New Covid-19 outbreaks have increased pressure on some businesses and households, the central bank said last month, when it slashed its outlook for 2021 gross domestic product (GDP) growth to 3% from 3.2 %, noting that the economy would not return to pre-pandemic levels until mid-2022.
Although the latest outbreak of infections has been largely contained, it has heightened fears that an economic recovery will be slow and uneven, prolonging the pain.
“Even before Covid, our debt to GDP was already the highest among emerging markets,” said Yunyong Thaicharoen, chief economist at Siam Commercial Bank.
“This is above a level which has a huge impact on GDP and household spending,” he said, adding that the debt ratio could peak at 90-91% of GDP in the month. first trimester.
The government has pledged 1 trillion baht in relief to mitigate the impact of the outbreak, but some say relief is not rolling out quickly enough for many Thais. Last year, a woman took rat poison to the finance ministry to protest the slow response. She survived and was promised her payment a few days later.
MOUNTAIN DEBT
The growing debt burden is likely to dampen private consumption, which accounts for half of Thailand’s $ 502 billion GDP, and will hurt lenders’ incomes if more loans turn sour.
Granted, the pandemic slowed demand for loans last year, but the collapsing economy also made it harder to repay their loans.
Consumer loans rose 4.6% last year, slowing from a 7.5% increase in 2019 as the epidemic reduced household purchasing power, according to the central bank.
But loans with a significant increase in credit risk surged, with auto loans reaching 9.5% of loans, the highest in at least three years.
Still, lender Muangthai Capital remains optimistic, targeting 20-25% annual loan growth over the next four years.
“The industry still has a lot of room for growth,” said deputy managing director Parithad Petampai, noting that the company’s loans increased tenfold to 70 billion baht last year from 2014.
For years, the credit facility for consumers and businesses has sparked many warnings about the dangers of rising household debt in Thailand, and now the pandemic has left millions of people out of work.
About 4.7 million workers are at risk of being affected by the outbreak, of which 1.2 million could become unemployed or underemployed, the central bank said in January.
Even after the economy has recovered and more jobs become available, debt distress will take a long time to tackle.
“We may earn more but it will go to servicing the debt, there is not much left to spend,” said Aree Onkloi, 22, a worker from northern Phitsanulok province, whose family owes close to one million baht.
“We will have to keep borrowing and never get out.”
This story was posted from an agency feed with no text editing.
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