Across mainland Southeast Asia, the region’s economic story is increasingly being shaped not by exports, industrial growth, or foreign investment, but by households taking on debt simply to meet everyday needs.
Key takeaways
- Household debt is rising across Southeast Asia as families increasingly borrow to cover everyday living costs rather than build wealth.
- Cambodia stands at the center of the crisis, where rapid credit growth, weak wages, and heavy microfinance borrowing have deepened household vulnerability.
- Analysts warn that if debt pressures continue unchecked, the crisis could spread beyond families and begin to threaten wider economic and financial stability
Analysts say what was once presented as financial inclusion is now becoming a source of financial vulnerability, as easy credit, weak wage growth, and limited public services leave millions of families under growing strain.
Cambodia has become one of the clearest examples of this shift. The country’s private debt to GDP ratio rose from 24.2% in 2010 to 134.5% in 2023, marking one of the fastest debt expansions in the region. That rise is now colliding with a weaker property sector, border disruptions with Thailand, and fresh US trade restrictions, intensifying pressure on already indebted households.
According to Cambodia’s Credit Bureau, the average outstanding personal loan per borrower stood at around $6,500 in December 2025, despite the garment sector’s minimum wage being only $208 per month. The figures highlight how sharply household borrowing has outpaced income growth in one of the region’s most vulnerable economies.
Borrowing for Daily Survival
The problem extends beyond Cambodia. Thailand’s household debt reached 86.8% of GDP in 2025, placing it among the most indebted economies in Asia. Myanmar is also dealing with chronic household debt, while Malaysia’s household debt stood at 84.3% of GDP by mid 2025.
The composition of debt varies across the region, with Malaysia’s borrowing concentrated in housing and vehicle loans, while Thailand carries a heavier share of personal consumption debt.
Experts say a growing number of households are borrowing not to invest or build wealth, but simply to cover food, healthcare and other basic expenses. In Thailand, 64% of non-performing loan accounts were linked to credit cards and personal loans, while many borrowers were spending more than half of their monthly income on debt repayments.
Rising living costs, combined with external shocks such as tariff threats and regional instability, have made that burden even harder to manage.
Antonios Roumpakis of Hong Kong Metropolitan University said Cambodia and Myanmar have been especially exposed because their growth models are more vulnerable to regional tensions and US tariffs. He also pointed to deeper structural problems, including oversupplied credit, weak financial regulation, and poor lending decisions, as key drivers of the crisis.
Microfinance, Poverty, and Wider Financial Risk
Microfinance has become a central issue in the debate over rising debt. Milford Bateman of Royal Holloway, University of London, said the boom in household debt across much of the Global South, particularly in Cambodia, can be directly linked to the commercialization of microcredit institutions that were once not-for-profit. Human Rights Watch reported that Cambodia’s 3.8 million households held more than 3.1 million microloans worth over $18 billion.
For many families, borrowing is increasingly tied to emergencies rather than opportunity. A health financing study found that 28% of people in Cambodia had borrowed money to pay for healthcare, while a 2025 UN study found that 23% of urban households in Myanmar were borrowing for medical costs. Analysts warn that such debt can trap families in long term poverty, often forcing them to sell assets or seek dangerous forms of work to survive.
The risks are also spreading into the broader economy. In Cambodia, the return of large numbers of migrant workers from Thailand has worsened household vulnerability, while falling remittances have removed an important financial buffer for many families.
In Thailand, heavy debt levels have been blamed for weak consumption, prompting repeated stimulus efforts by the government. Economists warn that if household debt continues to deteriorate, it could evolve from a social crisis into a wider banking problem.
Cambodia’s central bank has already approved the creation of asset management institutions to purchase non-performing loans, a sign of increasing urgency rather than long-term reform confidence. Analysts say the region’s debt crisis will not be solved by credit markets alone.
Stronger banking oversight, tighter regulation of microfinance, and broader access to healthcare, education, and housing will be essential if households are to avoid borrowing beyond their limits.
