The Bangkok Paradox: A city of opportunity where income struggles to keep up with living costs

Although Bangkok is often seen as the economic hub of Thailand, full of career opportunities, investment prospects, and a modern urban lifestyle, beneath the image of a "city of hope" lies a growing economic fragility that is increasingly worrying.

The latest report highlights what is now referred to as "The Bangkok Paradox," a situation where the rising cost of living is outpacing income growth, gradually eroding the quality of life for city dwellers year after year.

Income Below Many Global Cities

A survey on income and living costs in major global cities by Deutsche Bank serves as a key indicator of the economic and social landscape worldwide. The latest report, released on July 13, reveals that the average income in Bangkok stands at around 28,600 baht per month (or approximately 343,000 baht per year), ranking 59th globally. In contrast, cities such as Geneva, Zurich, Copenhagen, and even Singapore boast average monthly incomes ranging from 150,000 to 270,000 baht. Geneva, the top-ranking city, has an average income nearly 10 times higher than Bangkok's.

While this income may suffice in medium-sized cities with lower living costs, it is insufficient in Bangkok, where living expenses are among the highest in Southeast Asia. This makes it difficult for many residents to achieve financial stability, especially when considering the burden of debt.

Household Debt Surpasses 181% of Income

According to data from the Bank of Thailand, the average household debt in Bangkok is a staggering 181% of income. This means that for an annual income of 343,000 baht, the average person carries a debt load of about 620,000 baht, a figure well beyond the capacity for safe repayment by international standards.

When compared to major cities abroad, such as Zurich, where despite higher living costs, the average debt-to-income ratio is only 51%, or Frankfurt (Germany), with an average income of 153,408 baht, where the debt-to-income ratio stands at 45%, it becomes clear that residents of Bangkok struggle to save, invest, or even live with financial stability. For many in Bangkok, a significant portion of income goes towards debt repayment, leaving little room for savings, investment, or quality living.

High Cost of Living – Stagnant Income

What exacerbates the situation is the continuous rise in the cost of living in Bangkok, including the cost of food, housing, transportation, and utilities. Meanwhile, income has not kept up with inflation or productivity gains, resulting in a reduction in real income year after year. In other words, despite wages remaining stable or seeing small increases, residents are able to purchase less, face higher living difficulties, and have fewer opportunities.

Many people rely on personal loans or credit cards to get by each month, further exacerbating the problem of accumulating debt, creating a vicious cycle that is difficult to break.

The Worrying Paradox

The Bangkok Paradox is not just about economic figures; it highlights the structural imbalance growing in the city. While people have jobs, income, and hope, they are unable to “build a future” due to overwhelming debt and soaring living costs. The financial stability of individuals continues to decline.

This is the paradox of a city with skyscrapers, luxury malls, and endless opportunities – yet many citizens are unable to access a truly good quality of life.

What’s Driving The Bangkok Paradox?

Several complex factors contribute to the Bangkok Paradox:

• Soaring cost of living: The prices of property, transportation, food, and utilities in Bangkok continue to rise, outpacing the purchasing power of most residents.
• Income growth failing to keep up with expenses: While the economy may grow, income distribution remains uneven, and wage increases are insufficient to keep up with living costs.
• Economic structure: The reliance on the service and tourism sectors, which are susceptible to external factors, means the income stability of some residents remains highly volatile.
• Household debt: The easy access to credit, combined with a lack of financial discipline and a challenging economic environment, has resulted in dangerously high household debt levels.

Source: efinancethai.com