Expected to distribute 10,000 baht to vulnerable groups, pushing GDP this year to grow by 2.7-2.8%

he Economic and Business Forecasting Center of the University of the Thai Chamber of Commerce estimates that the handout of 10,000 baht in cash to vulnerable groups in September will stimulate the economy this year until next year. It is expected that this year's GDP will grow by 2.7-2.8%, supporting the government's policy to urgently solve household debt. After a survey found that in 2024, Thai households had an average debt of 606,378 baht/household, an increase of 8.4%, the highest increase in 15 years. Thanawat Polvichai, President and Advisor to the Economic and Business Forecasting Center of the University of the Thai Chamber of Commerce, said that the distribution of 10,000 baht in cash under the digital wallet project to vulnerable groups in September will help stimulate the economy. It is expected that vulnerable groups will use the money immediately. The money will flow into food and various purchases within the area. It is believed that the money will circulate at least twice, resulting in a 3.5 -4% expansion of the GDP in Q4/67, resulting in an additional 0.2-0.3% expansion of the GDP this year to 2.7-2.8% from the original estimate of GDP growth this year of around 2.5%. 'It is expected that the Thai economy in 2025 will have the opportunity to expand by 3.5-4%, partly due to the momentum in late 2024 from the driving force of digital wallets, combined with spending during the Chinese New Year, Valentine's Day, and Songkran festivals, amidst the economic situation where global interest rates are starting to decrease and Thailand has a national budget for investment disbursement as usual,' said Mr. Thanawat. The Economic and Business Forecasting Center of the University of the Thai Chamber of Commerce revealed the results of a survey on the status of Thai household debt in 2024, which found that Thai households have an average debt burden of 606,378 baht/household, an increase of 8.4% from the previous year and the highest increase since the survey began in the 15 years since 2009. Of this amount, 69.9% is in the system and another 30.1% is in the informal system. Mr. Thanawat said that supporting the government's policy on solving household debt is an important issue and a problem that has accumulated. The government must find clear information on how much of the reduction in household debt, including home debt and car debt, comes from converting informal debt into the formal system. This will show that the household debt problem is not a serious social culprit. It does not mean that the country cannot move forward if the debt benefits the people, such as debt for investment in a career, debt for purchasing family wealth, such as houses and cars, which when in debt in this part helps improve the quality of life. Therefore, the household debt problem is not a problem that undermines the economy. It only has a psychological effect from the perspective that when household debt is high, people will not be able to borrow new money or consume to their full potential. Since 2013, the household debt level ha s been higher than 80% of GDP, increasing to 90% of GDP since 2020 and continuously increasing to the highest level of 94.6% of GDP in 2021 due to the COVID-19 pandemic, which has caused economic activities in many sectors of the country to halt, coupled with the government's assistance measures in terms of debt suspension, the household debt has not decreased. 'The increase in household debt is partly due to the conversion of informal loans into the formal system, which increases the proportion of GDP. It is not a scary thing because it helps reduce interest rates from as high as 10% per month to around 3% per month. At that time, the government also had a policy of debt repayment suspension and helping people access more credit to reduce their dependence on informal loans,' said Mr. Thanawat. The center surveyed 'Thai Household Debt Status 2024' from 1,300 samples of people nationwide between September 1-7, 2024. When asked about saving for emergencies, the majority of the sample, 48.1%, had never saved a nything. 22.6% of the sample stated that they had enough savings to cover expenses for 6 months or more. Another 16% stated that they had enough savings for 3-6 months. The remaining 13.3% stated that they had enough savings for less than 3 months. When comparing the current household income and expenses, it was found that 46.3% of the sample group had household income less than expenses, followed by 35% of the sample group whose household income was equal to expenses, and another 18.7% of the sample group had household income more than expenses. When asked about solving the problem of insufficient income to cover current expenses, it was found that the first method was borrowing from various sources, the second was saving/reducing expenses, the third was withdrawing savings to use, and the fourth was earning additional income. In the case of borrowing, the sample group preferred to withdraw cash from credit cards the most, followed by borrowing from commercial banks and specialized banks, pawning assets, bo rrowing from cooperatives, and borrowing from relatives. In addition, when comparing debt to income in 2014, it was found that the majority of the sample group, 46.4%, responded that debt increased more than income increased, followed by 32.3% that debt increased equal to income increased, and another 21.3% stated that debt increased less than income increased. Almost all of the sample group, or 99.7%, responded that their household had debt, with only 0.3% having no debt. For debt types, the number 1 ranking is credit card debt, followed by vehicle debt, personal debt, housing debt, business debt, and education debt. As for the debt incurred by the sample group, it was found that the majority of the sample group, 89.9%, had only formal debt, followed by 39.8% who had both formal and informal debt, and another 0.3% who had only informal debt. The average amount of debt per household was 606,378 baht, the highest in 15 years since the survey was conducted in 2009. Household debt increased by 8.4% from the p revious year, broken down into formal debt of 69.9% and informal debt of 30.1%. The majority of the sample group viewed that both formal and informal debts had increased compared to the past year. The top 10 causes of increased debt are: 1. Income is not enough to cover expenses, 2. Unexpected circumstances requiring emergency funds, 3. Higher cost of living, 4. Higher family financial burden, 5. Investment failure, 6. Increased investment in business, 7. Increased purchase of fixed assets, 8. Increased spending via credit cards, 9. Tuition fees for children and grandchildren, and 10. Loss of income due to being laid off. The majority of the sample, 71.6%, stated that they had missed or defaulted on their debts, with only 28.4% saying that they had never defaulted on their debts. The most common factor causing defaults was the poor economy, followed by reduced income, reduced household liquidity, reduced agricultural product prices, cost of living not in line with income, and no additional sources of loans, etc. The Bank of Thailand (BOT) recently revealed that Thailand's household debt level in Q1/67 was 90.8% of GDP, with household debt slightly decreasing from the previous quarter (Q4/66 was 91.4% of GDP) due to a slowdown in household credit growth. Of the household debt in Q1/67, 34% was home loans, 25% was personal loans, 11% was hire purchase loans, 9% was other loans, and 3% was credit card loans. -511 Source: Thai News Agency