Pavida agrees that credit cards in particular have become an “easy trap” for young people exposed to aggressive marketing campaigns from banks.
Non-productive loans – those considered to increase spending power but not output – outweigh productive loans now in Thailand. They include debts for vehicles, personal loans and credit cards.
COVID-19 contributed to another spike in these types of debt levels as household incomes ran dry over the prolonged pandemic period.
Mali, a now 42-year-old Bangkok-based entrepreneur who also declined to give her full name, started a car loan during the period the government was offering its vehicle buying scheme. She now has two of them, on top of a mortgage for an apartment, a situation she considers “normal” nowadays in Thai society.
“A lot of Thais are in debt because their income is low when compared with the cost of living,” she said.
Average wages in Thailand were about 15,700 baht in the third quarter of 2024, according to the National Statistical Office of Thailand.
Mali admitted that debt had become a “big burden”, although she felt confident to manage it going forward. For this generation though, the debt story has evolved to become tougher to contend with compared to the past, she thinks.
Part of that can be explained by lifestyle – the buying demands of modern living with the influence of social media – and the changing behaviours of younger generations who no longer live at home until they are married like in the past.
“It seems like the older generation were paying off their loans easier than us. It feels like a really long journey for us,” Mali said.
Jack the teacher also flagged the difficulties of living in rural areas, with fewer public resources.
“Living in the countryside, there is no public transport that reaches right to your doorstep. That is why a motorbike is necessary. And the older generation can maybe live without a phone or computer but our generation cannot,” she said.
Jack’s situation is what is playing out all over the country, Pavida said, and evidence of the structural issues that exist beyond the obvious symptoms of overspending.
Do not just blame those in debt, she said, but rather investigate the “fundamental issues with the Thai economy” for both individuals and small business owners.
“It is a financial illness. But if you ask yourself why people want to buy a car, one of the problems is that they don’t have an alternative,” she said.
“And I think the kind of monopolistic dominance of big business is one thing that has taken the oxygen out for smaller entrepreneurs.”
There could be pain ahead for the Thai economy depending on the next moves by both the government and the Bank of Thailand.
Nonarit expects both to move cautiously, forecasting the government to try and raise public debt to GDP towards the ceiling limit of 70 per cent – above where it currently sits at about 64 per cent – to keep the money flowing through the economy over the next five years.
“But then we will have higher and higher debt. And this is the way they try to push the problem into the future,” he said.
The alternative would be to let people “feel the crisis and learn the pain” of bad borrowing.
“That’s the hard way. But I don’t think the Bank of Thailand will choose to let this happen”.
Additional reporting by Grissarin Chungsiriwat.
