bandid nijathaworn : update on the thai economy luncheon address by mr bandid nijathaworn, deputy governor of the bank of thailand, at the rotary club of bangkok south ( rcbs ), bangkok, 20 november 2009. * * * good afternoon, first, let me thank the rotary club of bangkok south ( rcbs ) for the invitation, and especially i want to thank peter williams for a very warm introduction. it is an honor to be speaking to you today, and my topic this afternoon is updating on the thai economy. as you are all aware, this year has been an exceptionally challenging year economically, not just for thailand but also for most other economies. this year the global financial crisis, which has been with us since august 2007, continues to impart negative impact on economic activities, employment, and access to financing worldwide. the good news is that things are looking up. there are better news coming from the advanced economies, suggesting that economic situations are improving and financial markets are stabilizing. in asia and the pacific, signs of recovery are also strong and lead those in the rest of the world. on the homefront, recent economic data for thailand are also more positive and indicate that the economy is slowly returning to growth after a sharp contraction we saw late last year and in the first quarter of this year. my talk today is to update you on the recent economic and financial developments, and to share with you our assessment of the prospect for next year, including the challenge for policy. let me begin first with the global economy. recent economic data, especially of the last few months, point to a picture of greater stabilization and more consistent signs of recovery in the global economy. the severity of the early economic contractions has eased while the levels of economic activities are gaining traction on a worldwide basis. in most major economies, final demand is showing signs of strengthening along with improvements in consumer confidence and business sentiment. more importantly, although the financial system in the advanced economies has not returned to normalcy, financial conditions have improved markedly with lower market volatility, reduced risk premia, and the unfreezing of interbank and other short - term funding markets. these positive developments have led to a view that the worst of the global crisis is now behind us, and forecasts of economic growth have been revised upwards for this year and next year. on the financial front, reflecting these recent developments, appetite for risky assets has returned, leading to

is important to look at the distribution of this debt – are the people holding it likely to be able to service it? graph 4 the hilda survey provides information on the distribution of household indebtedness and debt servicing as a share of disposable income. looking only at owner - occupier households that have mortgage debt, the survey suggests that the median housing debt - to - income ratio has risen steadily http : / / www. rba. gov. au / speeches / 2018 / sp - ag - 2018 - 02 - 20. html 6 / 14 21 / 02 / 2018 household indebtedness and mortgage stress | speeches | rba over the past decade to around 250 per cent in 2016 ( graph 4, left panel ). [ 1 ] however, the median ratio of mortgage servicing payments to income has been fairly stable through time, remaining around 20 per cent in 2016 ( graph 4, right panel ). in fact 75 per cent of households with owneroccupier debt had mortgage payments of 30 per cent or less of income, which is often used as a rough indicator of the limit for a sustainable level of mortgage repayments. [ 2 ] this suggests that, as recently as 2016, mortgage repayments were not at levels that would indicate an unusual or high level of financial stress for most owner - occupiers. but there is a significant minority for whom mortgage stress might be an issue. other data sources suggest that the number of households experiencing mortgage stress has fallen over the past decade. the census data show that the share of indebted owner - occupier households for which actual mortgage payments ( that is, required and voluntary payments ) were at or above 30 per cent of their gross income declined from 28 per cent in 2011 to around 20 per cent in 2016. and the 2015 / 16 household expenditure survey indicates that the number of households experiencing financial stress has steadily fallen since the mid 2000s. furthermore, a large proportion of indebted owner - occupier households are ahead on their mortgage repayments. we have highlighted this point in recent financial stability reviews. total household mortgage buffers – including balances in offset accounts and redraw facilities – have been rising over the past few years as households have taken advantage of falling interest rates to pay down debt faster than required. in 2017, total owner - occupier buffers were around 19 per cent of outstanding loan balances or around 2 ½ years of scheduled repayments at current