BANGKOK, Thailand – Thailand’s household debt ratio has fallen to 85.9% of GDP, its lowest level in six years, but the improvement may not be as reassuring as it appears, according to an analysis by Bnomics, the research arm of Bangkok Bank. The analysis warns that part of the decline reflects tighter access to credit rather than a broad improvement in household finances. At the same time, the nature of household debt is changing, with risks increasingly shifting from large loans to smaller debts that can be accumulated more easily and frequently, particularly through Buy Now Pay Later (BNPL) services and online installment platforms.
The Bnomics analysis argues that Thailand’s challenge is therefore not simply to reduce the amount of household debt, but to improve the quality of that debt. Borrowing that helps households acquire assets, invest in businesses or improve their earning potential can contribute to future financial security, while excessive consumer debt can become a long-term burden.
Debt is falling, but are households financially stronger?
At first glance, recent figures appear to suggest that Thailand’s household debt problem is gradually improving. Data for the first quarter of 2025 showed household debt at approximately 16.4 trillion baht, up just 0.5% from the same period a year earlier. Meanwhile, household debt as a percentage of GDP fell to 85.9%, the lowest level in six years. However, Bnomics cautions against interpreting the lower ratio as proof that households are becoming financially healthier.
One important factor is the growing difficulty of obtaining new credit. Financial institutions have become more cautious about lending, particularly to retail borrowers, amid concerns over loan quality and repayment risks. Loans to small and medium-sized enterprises, as well as consumer loans within the banking system, have contracted. Household lending by major financial institutions has also been declining for more than two years.
At the same time, nominal GDP has grown faster than the outstanding household debt balance. Because nominal GDP is used as the denominator when calculating the household debt-to-GDP ratio, faster growth in the economy’s nominal value can cause the ratio to fall even when the actual value of household debt continues to rise slightly. The decline in the debt-to-GDP ratio therefore does not necessarily mean households have more disposable income or are repaying their debts more comfortably. In part, it may simply indicate that taking on new debt has become more difficult.
The debt problem is changing shape
Household debt in the past was commonly associated with major financial commitments such as home loans, car loans or business investment. Today, however, consumers can take on debt with just a few clicks on a smartphone. Buy Now Pay Later services, online installment plans and other forms of digital credit have made borrowing significantly more convenient, particularly for younger consumers. Instead of taking out a single loan worth hundreds of thousands or millions of baht, borrowers can accumulate multiple smaller obligations, each requiring payments of only a few hundred or thousand baht a month. The problem arises when several small debts accumulate at the same time.
The combined monthly burden can become considerably larger than consumers initially expect, particularly when income is unstable or borrowers lack sufficient savings to cover unexpected expenses. This means the household debt risk facing Thailand may increasingly involve the frequency and accessibility of borrowing, rather than simply the size of individual loans.
Young Thais are entering adulthood with debt
The Bnomics analysis highlights growing concerns among younger borrowers. According to data cited in the analysis, about 52.7% of Thais aged 20 to 35 have debt, while the proportion of non-performing loans among this group is reported at around 27%. BNPL users are also concentrated among people under 30. Students and younger workers aged 23 to 30 reportedly show higher rates of overdue payments than other groups. This is changing the way younger generations begin their financial lives. In the past, major debt often emerged later, when people purchased a home or car. Today, young people can begin accumulating installment obligations while they are still studying or shortly after entering the workforce.
If incomes fail to rise in line with debt repayments, money that could otherwise be saved, invested or used to build assets may instead be diverted toward servicing debt. This could delay the process of building long-term financial security.
From debt that builds assets to debt that funds consumption
The type of debt households take on is just as important as the total amount they owe. Borrowing to purchase an asset, invest in a business or develop professional skills can potentially generate additional income or value in the future. Consumer debt is different. In some cases, it allows households to bring future purchasing power forward and spend it today without creating a new source of income to cover the resulting obligation. The earlier consumers begin accumulating this type of debt, the more of their future income may become committed to repayments. For younger workers in particular, this can reduce the amount available for savings and investment during the years when they are beginning to build their financial foundations.
Household debt remains a drag on Thailand’s economy
The household debt problem also extends beyond individual families and remains a constraint on Thailand’s economic recovery. Bnomics cited International Monetary Fund projections that Thailand’s economy is expected to grow by around 1.9% in 2026, while high household debt remains one of the factors limiting stronger growth. When a significant portion of household income is committed to debt repayments, less money is available for consumption, savings and investment.
The impact can therefore spread from individual household balance sheets to domestic purchasing power and the broader economy. Weak household spending can make it harder for the economy to generate stronger growth, creating another challenge for households already facing slow income growth.
An ageing society adds another layer of pressure
Thailand’s transition into an ageing society is also making household debt management more complicated. With the working-age population gradually shrinking, many working-age people are having to manage several financial responsibilities at the same time. These can include mortgage payments, raising children, supporting parents and preparing for their own retirement. If household income does not rise fast enough to keep pace with these obligations, the ability to save and repay debt can weaken further. The combination of ageing demographics, slower economic growth and existing household debt could therefore create greater financial pressure in the years ahead.
When formal credit becomes harder to access, debt can move elsewhere
Tighter lending standards do not necessarily eliminate households’ need for money.
When banks become more cautious about extending loans, some consumers may look for alternative sources of financing that are easier to access. Bnomics noted that lending through pawnshops and savings cooperatives has continued to expand, while some lower-income households face a greater risk of turning to informal sources of finance. This creates another challenge for policymakers. A slowdown in formal bank lending does not automatically mean that the total financial burden on households has fallen. Some debt may simply be moving into channels that are more difficult to monitor and regulate.
The goal should be better debt, not simply less debt
Debt itself is not necessarily harmful. Borrowing can allow people to purchase homes before they have accumulated enough savings to pay the full cost upfront. It can help entrepreneurs invest in businesses and allow people to pay for education that may increase their future earning potential. The key question for Thailand is therefore not simply how to reduce household debt, but how to ensure that more of the debt households take on contributes to their future financial capacity.
A household taking on debt to build an asset or generate income faces a different financial situation from one repeatedly borrowing to cover everyday consumption.
The distinction is becoming increasingly important as digital credit makes small-scale borrowing easier and more frequent. Thailand’s falling household debt-to-GDP ratio is therefore encouraging, but it should not be viewed as evidence that the household debt problem has been solved.
If the ratio is falling partly because access to formal credit has tightened, while smaller debts are growing through BNPL services, online platforms, cooperatives, pawnshops or informal lenders, the underlying problem may not have disappeared. It may simply be changing form — and becoming harder to see.
