Thailand’s economy stumbles while Philippines, Vietnam, Indonesia rush ahead | Business and Economy

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Bangkok, Thailand – Protecting herself from the sun on a street corner, Kridsada Ahjed rues the day she joined the lenders who now earn more than their daily income.

“I went to the lenders because people like me – without property or money – cannot get help from official banks,” Ahjed, a 40-year-old motorcycle driver, told Al Jazeera.

“Now almost everything I make in a day is paying my interest.”

Kridsada is very far away.

Household debt in Thailand reached about 87 percent of total household income last year, according to the Bank of Thailand, among the highest in the world.

About $1.5bn of this debt is said to be made up of high-interest loans.

Kridsada’s problems are part of the crisis that has affected Thailand’s economy

After decades of strong growth, Thailand is showing all the signs of a middle-income trap, experts say, as a combination of low productivity and poor education leaves many working people with low-wage, low-wage jobs.

“Thailand suffers not only from the slow decline of its main export markets, but also from changes in globalization that are damaging its competitiveness,” Pavida Pananond, professor of international business at Thammasat Business School, told Al Jazeera.

“International trade is increasingly driven by value-added services that require high-quality and specialized skills. This requires the systematic promotion of workers and the development of local companies beyond short-term supply and economic incentives.”

Thailand’s Southeast Asian partners, including Indonesia, have quickly recovered from the outbreak [Ajeng Dinar Ulfiana/Reuters]

While other Southeast Asian countries are rebounding strongly from the economic fallout of the COVID-19 pandemic, Thailand has been weak.

Thailand’s economy grew by 1.9 percent last year, according to economic planners, compared with growth of 5 percent or more in the Philippines, Indonesia and Vietnam.

Even neighboring Malaysia, a highly developed economy that is expected to grow at a slower pace, registered a growth rate of 3.7 percent.

Despite the resurgence of Thailand’s tourism sector, which accounts for one-fifth of the economy, its prospects do not look good in 2024.

The World Bank on Monday said it expects Thailand’s economy to grow 2.8 percent this year, slightly better than Bangkok’s estimate.

The Philippines, Indonesia, Vietnam and Malaysia are expected to see growth between 4.3 and 5.8 percent.

Thai Prime Minister Srettha Thavisin who came to power in August after almost a decade of military rulehas declared that the economic situation is a “problem”.

Srettha, who has also turned into a politician, proudly calls himself a “trader” in Thailand.

Since coming to power in a coalition with the royal establishment to block the revolutionary Move Forward Party, the 62-year-old politician has traveled the world in search of free enterprise and promoting the country as a global manufacturing hub.

But after years of Bangkok’s neglect of much-needed economic reform, there are fears that the economy may resist a quick fix.

Critics say Thailand’s military leaders have for years blocked international investment, relied too much on China’s economic boom and destroyed the potential of young Thais by neglecting to fund education that could create workers suitable for the digital age.

The World Bank said in a report released last month that two-thirds of Thailand’s youth and adults “have below the basic literacy level”, while three-quarters have no digital literacy skills.

Currently, Thailand’s English language is among the lowest in the Association of Southeast Asian Nations (ASEAN).

To boost the economy, Srettha has proposed offering a 10,000-baht ($280) stipend to nearly every Thai over the age of 16 – a policy that economists and political rivals say is harmful – expanding visa-free entry to many countries, and registering legal casinos. . .

Thai
Prime Minister Srettha Thavisin has said that the economic problems in Thailand are serious [Andrew Caballera-Reynolds/AFP]

“They face political threats for ‘doing’ and ‘not doing’ this,” Move Forward Party deputy leader Sirikanya Tansakul told Al Jazeera.

“It’s a big way of giving money, he faces legal problems because of illegal lending and non-compliance with the contract. But if he can’t launch a very big election campaign, people won’t trust him.”

Srettha has also started a public spat with the Bank of Thailand, which he urged to cut interest rates to stimulate growth.

The central bank has refused to lower the benchmark rate, which has been set at 2.5 percent, stressing the need to protect their independence.

In a scathing review earlier this year, Pranee Sutthasri, a member of the central bank’s finance department, said the country had “lost its competitiveness”.

Sutthasri pointed to global pressures – including China’s decline and wars in Ukraine and the Middle East – and the kingdom’s failure to invest in educating people to use the digital economy.

“It will continue to lag behind if, instead of producing high-tech products, Thailand continues to produce electronic products that people no longer need,” he told reporters in late January.

For Srettha, who was not a first-time candidate for elections, a bad economy carries political risks.

“Political issues that continue to interfere in domestic politics are red flags for investors,” said Pavida of Thammasat Business School.

“And now they have elections elsewhere without waiting until Thailand is ready.”

For many Thais who are struggling to make ends meet, the faltering economy brings many challenges.

Hoo Saengbai, a 61-year-old lottery ticket seller in Bangkok, said his monthly income has halved to $110 over the past few years as people cut back on unnecessary spending.

“I’m not sure about the government or any government,” he told Al Jazeera. “I just try to put food on the table every day. I eat if I get something, I don’t eat if I don’t. That’s all.”

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