Bangkok (VNA) - In the first quarter of 2025, Thailand’s household debt fell for the fifth straight quarter, dropping to 87.4% of the country’s Gross Dome👍stic Product (GDP).

The decline reflects weaker demand for borrowing and tighter lending standards imposed by financial institutions. According to the Bank of Thailand report issued on June 30, total household debt tallied 16.35 trillion THB (503.4 billion USD) in the first quarter of 2025, equivalent to 87.4% of GDP, down from 16.42 trillion or 88.4% of GDP in the previous quarter. Both the amount and ratio of household debt have consistently declined over the past five quarters, falling from 16.39 trillion THB or 91.3% of GDP in the fourth quarter of 2023, according to central bank data. A significant portion of household debt is owed to commercial banks, which accounted for 6.14 trillion THB in the first quarter of 2025, down from 6.20 trillion THB in the fourth quarter of 2024 and 6.33 trillion in the first quarter of 2024. The decline in household debt was driven largely by reduced auto and motorcycle loans. These loans totalled 1.58 trillion THB in the first quarter of 2025, a drop of 2.57% from the previous quarter (1.62 trillion THB), and down 9.8% from 1.76 trillion year-on-year. However, housing loans remained relatively stable. Outstanding housing loans totalled 5.64 trillion THB in the first quarter of 2025, edging down 0.17% from the previous quarter, but increasing 1.89% year-on-year. Suwannee Jatsadasak, assistant governor for the supervision group at the central bank, said last week the continued decline in the household debt-to-GDP ratio reflects lower loan demand in line with prevailing economic conditions and slower credit growth in the banking sector. Meanwhile, Kasikorn Research Center (K-Research) reported total outstanding bank loans as of May 2025 tallied 13.7 trillion THB, a 1.3% year-on-year decrease. Loan contraction in the banking sector began in June last year, driven by borrowers' weakened repayment capacity and banks’ ongoing cautiousness amid rising risk factors. Bank deposits continued to grow, though at a slower pace, rising just 1.0% year-on-year in May to a total of 16.2 trillion baht. This slowdown in deposit growth mirrors the weak credit environment. However, this has not affected overall liquidity, which remains strong, noted K-Research. K-Research expects the non-performing loan ratio to rise to no more than 3% by year-end, in line with prevailing economic conditions./.