Filipino families’ debt burden lowest in Southeast Asia

Filipino families tend to be more cautious and conservative in their approach to debt when compared to their neighbors in

Southeast Asia.

With a debt ratio of only 12.6 percent, Philippine households recorded the lowest debt burden compared to those in Indonesia, Vietnam, Singapore, Malaysia, and Thailand in the fourth-quarter of last year.

Latest data from the Institute of International Finance’s (IIF) Global Debt Monitor revealed that the ratio of Filipino households’ total debt to the country’s economy, or gross domestic product (GDP), even decreased from 13.8 percent in 2022.

In comparison to other countries in the ASEAN, Filipino households have a lower debt ratio than Indonesia (16.6 percent), Vietnam (26.5 percent), Singapore (47.3 percent), and Malaysia (68.9 percent).

Conversely, Thailand holds the highest household debt ratio in the region, nearly equivalent to its entire economy at 91.6 percent.

The findings from the IIF come as no shock, considering the deeply ingrained cultural perception among Filipinos toward credit, commonly known as “utang.”

Pia Arellano, Transunion Philippines president and chief executive officer, had explained that Filipinos’ reluctance to utilize credit reflects a conservative financial mindset, where it is not always recognized as a means for progress.

“This coincides with a longstanding stigma across our nation surrounding credit, as it’s often viewed as a gateway to bad unmanageable debt and financial irresponsibility,” Arellano said.

According to the IIF, Filipino households’ total debt was recorded at $55.1 billion in the fourth quarter of last year, equivalent to ₱3.08 trillion.

In comparison to its regional peers, the debt amount is notably lower: Vietnam ($111.4 billion), Indonesia ($224.6 billion), Singapore ($236.6 billion), Malaysia ($275.5 billion), and Thailand ($481 billion).

Filipinos’ total debt

The Philippines’ total debt increased by 5.4 percent to $459.6 billion in the fourth quarter of the previous year from $436 billion in the same period in 2022, the IIF data showed.

The government accounts for over half of that total amount at 251.5 percent, followed by non-financial corporations at $120.4 billion, households at ₱55.1 billion, and the financial sector at $32.7 billion.

Across all sectors, non-financial corporations' debt ratio reached 27.5 percent in the fourth quarter, down from 29.9 percent a year earlier.

Moreover, the debt ratio of the local financial sector also declined by 2.3 percentage points to 7.5 percent from 9.8 percent during the same period.

Meanwhile, the government debt ratio was steady at 57.5 percent.