TEMPO.CO, Jakarta - From Phnom Penh to Bangkok, a growing share of mainland Southeast Asia's economic story is no longer about exports, investment or factory growth, but about households borrowing simply to get by.
What was once sold as financial inclusion is curdling into financial stress, analysts say, as years of easy credit, weak wage growth, and inadequate public services have left millions of households dangerously exposed. There are fears a household debt problem could become a broader financial one.
Cambodia is at the center of the crisis. The country's credit boom lifted the private debt-to-GDP ratio from 24.2% in 2010 to 134.5% in 2023, one of the region's sharpest expansions.
That boom is now colliding with a softer property sector, border disruptions with Thailand, and new US trade restrictions.
According to Cambodia's Credit Bureau, as of December 2025, the average outstanding personal loan per borrower was around $6,500 (€5,665). The garment sector minimum wage is $208 per month.
Thailand's household debt stood at 86.8% of GDP in 2025, making it one of Asia's most indebted economies.
Myanmar is also struggling with chronic household debt, while Malaysia's debt-to-GDP ratio had reached 84.3% of GDP by mid-2025.
The composition of that debt differs. In Malaysia, housing and car loans account for about three-quarters of household borrowing, while in Thailand, personal consumption loans make up a much larger share.
Bank Negara Malaysia data shows that, while household debt remains elevated, the impairment ratio remained only 1.1% by mid-2025, meaning that most borrowers continues meeting repayments.
Borrowing to Live
Antonios Roumpakis, an associate professor at Hong Kong Metropolitan University, told DW that households across Southeast Asia have increasingly turned to credit not to invest or build wealth, but to cover everyday expenses in economies where incomes fall behind living costs.
In Thailand, 64% of loan accounts classified as non-performing were credit card and personal loans, while Thai debtors spent more than half of their monthly income on servicing debt.
Economic instability, from US tariff threats to the US-Israel war with Iran, has further increased living costs.
"Cambodia's and Myanmar's economic growth model is badly affected [more than Thailand] by the recent regional tensions and also US tariffs," said Roumpakis, who added that deeper problems — an oversupply of credit, poor lender decisions, and weak financial regulation — lie at the root of the crisis.
Microfinance's Role in Rising Debt
"The problem of booming household debt everywhere in the Global South, but most notably in Cambodia, can be directly traced back to the commercialization of all not-for-profit microcredit institutions," Milford Bateman, honorary research associate at the Royal Holloway College of the University of London, told DW.
Human Rights Watch reported last year that Cambodia's 3.8 million households held more than 3.1 million microloans worth over $18 billion.
In Cambodia, a widely cited health-financing study found that 28% of people had borrowed money to pay for healthcare services.
In urban Myanmar, a 2025 UN study noted that 23% of households were borrowing to cover medical costs.
"For most of the poor, it represents a descent into irreparable poverty," Bateman told DW.
"Increasingly, families can only survive in these regions by going into more and more debt, then selling off family assets, then being forced into all sorts of dangerous ways to ensure their families survive," he added, such as working in brick kilns or scam centers to repay debts.
That vulnerability has only worsened in Cambodia since last year's border hostilities with Thailand.
More than 900,000 Cambodian migrant workers are estimated to have returned home. However, by late August, only 21% of them had secured employment, leaving nearly half a million jobless.
Remittances, which had helped families manage debts, fell to $1.86 billion in 2025, down from $2.95 billion a year earlier
From Household Strain to Financial Risk
Economic analysts blame Thailand's high levels of household debt for chronically weak consumption, prompting repeated stimulus attempts, including the muchpublicized 10,000baht cash handout scheme.
The political danger is that what begins as a debt problem eventually becomes a banking problem.
In Cambodia, the central bank approved the creation of asset-management institutions to buy non-performing loans.
Such mechanisms have been discussed for years across the region. Their arrival in Cambodia now is less a sign of reformist ambition than of mounting urgency.
Analysts told DW that the cures to this debt crisis are not simple. They range from stronger banking regulation and tighter oversight of microfinance lenders to deeper social reforms so households can access healthcare, education and housing without having to borrow to the breaking point.
"More liberalization is not likely to benefit local economies, unless there are strong monitoring and regulatory bodies in place, a hard ask for now," Roumpakis cautioned.
Read: Why Authoritarianism Won't Fix Corruption in Southeast Asia
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