Swelling household debt is expected to remain a drag on private consumption next year.
However, the rate of household debt expansion could cool down after many individuals who shouldered debt to buy automobiles under the first-time car buyer scheme pay off their debt.
Don Nakornthab, the Bank of Thailand's director of macroeconomic policy, said household debt could rise further this year, but next year's private consumption would be lifted by households finishing instalment payments on their car loans.
"Household debt could slow further [following the slower credit growth rate], while GDP growth is expected to be stronger next year," he said.
However, Mr Don said private consumption was not expected to expand substantially this year, given the high level of household debt. But overall financial stability remains sound, as reflected by financial institutions' healthy loan-loss reserves.
Thailand's household debt to GDP was deemed high at 85.9% at the end of last year, but other countries including Australia, Canada and Malaysia had higher ratios, he said.
Finance Minister Sommai Phasee said the pace of Thailand's household debt growth started slowing last year thanks to the low level of bad household loans.
The ratio expanded more slowly last year despite the country's economic growth coming in at a mere 0.7%, Mr Sommai said.
The country's household debt ratio surged to 70.6% in 2011 from 63% in 2010 as Thais ran up debt to finance renovation of their homes inundated by the worst flooding in decades.
It jumped further to 77.3% in 2012 and 82.3% in 2013 due largely to the Yingluck Shinawatra government's consumption-oriented populist policies such as the tax rebates for first-time buyers of cars and homes.
The share of household non-performing loans (NPLs) last year stayed at a low 3.1%, below the danger level.
The NPL ratios of personal loans and mortgages at 4.7% and 3.4%, respectively, were higher than that for overall household bad loans.
Thai families were saddled with 10.4 trillion baht worth of debt as of the end of last year.
Of that, 27% was for home loans, 16% car loans, 3% credit-card loans, 3% personal loans from non-bank financial institutions, 19% other consumer loans, 17% commercial loans and 15% loans from cooperatives.
Mr Sommai said unsecured household debt, comprising consumer, personal and credit-card loans, was difficult to control, while secured loans were not very worrisome.
Unsecured loans account for a quarter of household debt.
Several factors must be considered when comparing Thailand's household debt-to-GDP ratio with that of other countries, Mr Sommai said, adding that one factor was accessibility of borrowing sources.
For example Indonesia's rate is relatively low at 17% of GDP, as its geographical situation, with thousands of islands, hampers many people from reaching funding sources.
To address the swelling household debt in the long run, the government is focusing on income distribution and inequality.
It recently approved pumping an additional 40 billion baht into the Village Fund scheme to boost rural residents' incomes.
The government also approved the establishment of nanofinance firms to widen low-income earners' choices in borrowing and encourage them to shun loan sharks. Applications for the nanofinance scheme opened in January.
Operators with registered capital of at least 50 million baht will be eligible to become nanofinance institutions under central bank criteria, with their debt-to-equity ratio not exceeding seven times their registered capital.