Rising interest rates blow up household debt. Kiatnakin worries regarding low-income groups, suggesting 2 ways to reform the economy
Kiatnakin warns that rising interest rates might detonate Thai households’ debt Worried regarding the low income group 20%, income 10 thousand baht, expenses 12 thousand baht, food expenses – aggravating energy Recommends urgent reform of the economic structure through two approaches
News report from Kiatnakin Phatra Financial Group Research Department (KKP Research) Released a report on forecasting interest rates to rise. It might detonate a huge problem in Thailand’s household debt. The group of greatest concern is household debt, which is currently rising above 90% of GDP and is the 11th highest in the world due to insufficient income to meet expenses. Especially the lowest-income households, 20% have an average monthly income of 10,000 baht, while the monthly expenses are at 12,000 baht and need to borrow money for consumption. In addition, the problem of household debt may affect the economy more severely and harder than other countries. Because Thailand has the highest wealth inequality. Low-income households with food and energy baskets are more affected by inflation. resulting in lower savings Decreased ability to pay back debt As a result, the direction of bad debt in Thailand tends to increase in the future.
However, the chance of a short-term crisis in Thailand is low. because foreign stability is still good But in the long run, there are risks that must be monitored, namely: 1. Loss of competitiveness may cause the current account balance to become negative. 2. Change of long-term monetary policy direction of major economies 3. The tourism sector may not grow as well as before. China has returned to promote domestic tourism.
Sustainable debt solutions need to focus on reforming the economic structure for competitive and long-term growth. No country has successfully reformed the economy in such a short time, and monetary policy plays a role in regulating the nature of the debt cycle. The monetary policy must not encourage the country’s economy to continue to grow in debt. will make the economy seep for a long time Is the first solution. At the same time, raising interest rates to bring the economy into the process of reducing the burden of debt in the system. Be careful not to go too fast and lead to a crisis is the 2nd solution. Be optimistic.
If the debt cycle is past its peak in the later period. The vision of the problems of the Thai economy is possible without distortion. because there is no debt to help grow up anymore It is a signal to accelerate long-term structural reforms of the economy.
