BANGKOK, Thailand – The Bank of Thailand’s (BOT) 2024 Financial Stability Report affirms overall stability across the financial system, including commercial banks, specialized financial institutions (SFIs), non-bank lenders, and savings cooperatives. Household debt as a share of GDP continues to decline, bolstering long-term financial resilience.
Nonetheless, the report cautions that several vulnerabilities persist. Investor sentiment remains fragile amid ongoing external trade tensions, while specific sectors are showing signs of strain. The BOT warns of potential asset sell-offs, declining financial asset prices, and increased rollover risks. Additional pressure may come from global asset price corrections and intensified competition from Chinese imports, both of which could dampen stability and weaken investor confidence.
Credit growth has slowed under tighter financial conditions, and corporate bond issuance has declined. Financial institutions are becoming more selective due to heightened credit risks. The U.S. tariff hike is expected to further strain exports and intensify Chinese competition, particularly for small and medium-sized enterprises (SMEs) with limited access to financing.
The BOT also highlighted concerns about highly leveraged large corporations (HLLCs) and property developers. While these sectors currently show adequate short-term liquidity, their growing debt burdens pose medium-term risks. Developers, in particular, are under pressure from weak housing demand and new challenges, including the recent earthquake in Myanmar, which has dampened condominium sales.
To counter these emerging risks, the BOT, the Securities and Exchange Commission (SEC), and the Ministry of Finance have introduced a mix of short- and long-term policy responses. Immediate measures include relaxed repayment conditions, eased mortgage regulations, and safeguards for both the stock and futures markets.
Looking forward, structural initiatives aim to strengthen financial access and system resilience. These include the “Your Data” project to expand credit availability, the establishment of the National Credit Guarantee Agency (NaCGA), and enhanced regulations to promote responsible lending, address non-performing loans, and improve oversight of bond issuance for better investor protection. (NNT)
