Thai households are saddled with the highest level of debt in 14 years and prospects remain worrisome as the Thai economy has not yet recovered while the prices of goods keep rising, weakening consumer purchasing power.
The latest survey by the University of the Thai Chamber of Commerce (UTCC) interviewed 1,260 respondents whose income is below 15,000 baht per month, finding that 99% of them were in debt.
Debt was mainly incurred from daily expenses, credit cards and residential and vehicle purchases.
The survey estimated the average debt per household at 217,952 baht, up 5.9% from a year earlier and the highest level recorded in 14 years.
Thanavath Phonvichai, president of the UTCC, said Thailand's household debt-to-GDP ratio may rise to 93-95% in the near future from an average of 90% at present if the country's economy shrinks this year. This will further weaken people's purchasing power, he said.
According to the survey, some 31.5% of respondents have defaulted on debt repayments in the past 12 months, mainly because of the higher cost of living, a drop in income, rising product prices and a higher level of debt.
The majority of respondents said the Thai economy has not yet recovered and called on the government for help, especially in terms of assistance to cope with the higher cost of living.
Respondents also sought a hike in the daily minimum wage to keep up with the higher cost of living, rising expenses and product prices.
According to Mr Thanavath, given the country's inflation rate, which is expected to stay at 4-5% this year, any hike in the daily wage should be no less than 5%.
"Workers' calls to raise the daily wage to 492 baht per day from 336 baht at present are considered to be relatively high," he said. "This may lead employers, especially smaller ones, to face a sharp and sudden shortage of liquidity, nudging them to raise product prices, which eventually affects all consumers."
Mr Thanavath said the domestic retail price of diesel may surge to 35 baht per litre next month after the cap of 30 baht per litre is lifted later this month. The Russia-Ukraine conflict shows no signs of abating, he said.
"Every one baht rise per litre in the diesel price is expected to affect Thai economic growth by 0.2 percentage points," said Mr Thanavath. "If the diesel price rises by 5 baht per litre as predicted, the economy in the second half would dip by 0.5 percentage points."
He said without additional stimulus measures, the Thai economy is likely to grow 3% this year.
