Thailand is grappling with a significant household debt crisis while also striving for economic growth. The country's total household debt has surpassed $500 billion, reaching a staggering 90% of GDP, which is double the average for emerging markets. Newly appointed Prime Minister Paetongtarn Shinawatra, who took office in September 2024, is under pressure to address this urgent issue [0dff6d55].
In a recent announcement, Thailand's Finance Ministry projected a GDP growth of 2.7% for 2024, with an optimistic target of 3% for 2025. This growth is supported by expectations of increased tourism, with arrivals anticipated to reach 36 million, generating approximately 1.69 trillion baht (around $50 billion) [6e1ebdbf]. The Fiscal Policy Office (FPO) Director-General Pornchai Thiraveja confirmed a growth forecast range of 2.2% to 3.2%, following a modest growth of 1.9% in 2023 [6e1ebdbf].
The government is expected to unveil a debt relief package soon, collaborating with banks and utilizing a state bailout fund to alleviate the financial burden on households [0dff6d55]. The World Bank's Kiatipong Ariyapruchya has warned that high household debt levels could suppress economic growth, emphasizing the urgent need for effective measures [0dff6d55].
Thailand achieved middle-income status in the early 1990s but has struggled to advance beyond this point. As of 2023, GDP per capita was about $7,000, significantly lower than that of China and Malaysia. The 1997-98 Asian financial crisis severely impacted the economy, leading to a slow recovery and average growth of just over 4% annually since then [2262a87c].
The rise in household debt is often linked to the populist policies of former Prime Ministers Thaksin and Yingluck Shinawatra, which have contributed to the current financial landscape [0dff6d55]. The situation has escalated, with the suicide rate in Thailand rising to 7.9 per 100,000 people, a statistic associated with the pressures of debt [0dff6d55].
As household debt per household is projected to increase by 8.4% to 606,378 baht (approximately $18,244), analysts warn that informal debt could add an additional 10-20% to GDP, complicating the economic scenario further [0dff6d55]. S&P Global Ratings has also issued warnings regarding unsustainable levels of household leverage, emphasizing the need for immediate action [0dff6d55].
In conjunction with these challenges, private consumption is projected to grow by 4.6%, while exports are expected to increase by 2.9%. However, private investment is forecasted to decline by 1.9% [6e1ebdbf]. The current account surplus is predicted at $10.3 billion, with a trade surplus expected to drop to $13.5 billion. Inflation is anticipated to remain low at 1% for 2025, but risks such as geopolitical tensions and the ongoing household debt crisis loom large [6e1ebdbf].
As the new leadership navigates these complexities, the focus will be on balancing immediate economic stimulus with sustainable debt management strategies and fostering local enterprise growth to escape the middle-income trap [2262a87c][632dc16c].