It has been almost two months since the May 14 general election in Thailand, where voters elected the relatively new and pro-democratic Move Forward Party as the winner. However, the country's persistent problem of excessive household debt continues to worsen, posing challenges for the central bank as it awaits the formation of a new government.
On July 3, the Bank of Thailand reported that Thailand's household debt had reached 16 trillion baht ($455 billion) in the first quarter of 2023, accounting for 90.6% of the country's gross domestic product. This represents a further deterioration compared to the 87% recorded in the fourth quarter of 2022. The central bank's redefinition of household debt also contributed to the increase in this figure.
This data comes at a time of political uncertainty in the country. As early as July 13, parliament is set to elect the next prime minister through a joint vote of 250 senators and the 500 newly elected members of the House of Representatives. However, with Move Forward's eight-party coalition controlling just over 310 seats in the House, there is no guarantee that their leader, Pita Limjaroenrat, will secure the 376 votes needed to become prime minister.
If the prime ministerial vote becomes contentious and doubts persist about the formation of a new government beyond the end of the fiscal year in late September, the caretaker government led by Prayuth Chan-ocha may continue with limited ability to take significant fiscal steps. Additionally, if someone other than Pita becomes the prime minister, protests may ensue, further complicating the government's management of the situation.
This uncertainty has left Thailand's financial industry and market watchers anticipating a policy paralysis.
On July 3, the Bank of Thailand reported that Thailand's household debt had reached 16 trillion baht ($455 billion) in the first quarter of 2023, accounting for 90.6% of the country's gross domestic product. This represents a further deterioration compared to the 87% recorded in the fourth quarter of 2022. The central bank's redefinition of household debt also contributed to the increase in this figure.
This data comes at a time of political uncertainty in the country. As early as July 13, parliament is set to elect the next prime minister through a joint vote of 250 senators and the 500 newly elected members of the House of Representatives. However, with Move Forward's eight-party coalition controlling just over 310 seats in the House, there is no guarantee that their leader, Pita Limjaroenrat, will secure the 376 votes needed to become prime minister.
If the prime ministerial vote becomes contentious and doubts persist about the formation of a new government beyond the end of the fiscal year in late September, the caretaker government led by Prayuth Chan-ocha may continue with limited ability to take significant fiscal steps. Additionally, if someone other than Pita becomes the prime minister, protests may ensue, further complicating the government's management of the situation.
This uncertainty has left Thailand's financial industry and market watchers anticipating a policy paralysis.