BoT keeps close eye on rise in household debt

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BANGKOK, 3 March 2013 The Bank of Thailand (BoT) has stated that the Thai economy has expanded at a better-than- expected rate over the past year, while the growth trend is likely to continue. The central bank, however, warned of economic risks, brought on by an increase in household debt.

BoT Governor Prasarn Trairatvorakul, on Saturday, gave a special lecture on Thailand’s financial direction at the central bank’s northern office.

Mr. Prasarn stated that the Thai economy during the past year had improved more than expected due to strong domestic spending and the government’s relaxed monetary policy.

However, he warned that risk factors like global economic volatility, growing household debt and capital inflow may tip the balance of the economic system.

The central bank governor still believes that such risk factors will not be so severe that they will trigger an economic crisis like in the case of the economic bubble burst in 1997.

Mr. Prasarn added that extra attention should be given to the issues of household debt, which may soar because of the government’s First Car project, and personal loans popular among low-income earners.