‘Thailand Survival’: How can the country escape global crisis?

“Thailand still faces inflation of 7.7 per cent and rising,” Shine Bunnag, CEO of Nation Group, said. Risk factors from the Russia-Ukraine war were worsening and prolonging the inflation problem, he added, so “Thailand Survival” solutions must be found.

Kobsak Pootrakool, chairman of the Federation of Thai Capital Market Organisations (Fetco), said Thailand faces seven economic challenges. These were international conflict, the energy price crisis, impacts of globalisation, the global food crisis, financial market volatility, recession in the United States and elsewhere, an emerging markets crisis, and China’s economic problems.

He noted that the US Federal Reserve raised its benchmark interest rate by 75 basis points on July 27, the latest in a series of rate hikes aimed at cooling the US economy and lowering inflation. However, impacts from the rate hikes are being felt around the world, including in emerging economies like Thailand.

"One thing to keep an eye on now is the crisis in emerging countries or the Emerging Market, which started with small countries like Sri Lanka," Kobsak said.

He said the economic crisis will deepen over the next two years as emerging markets come under more pressure from three factors.

These were: rising interest rates as major countries fight inflation; global energy and food crises driven by rising prices; and the global economic slowdown hitting exports.

However, the good news was that Thailand had suffered relatively minor impacts from the global food crisis. Meanwhile, the Thai agricultural sector and tourism industry could potentially rescue the economy while the weak baht was beneficial to exports, he said.

"All of this means that the tail of the monsoon in emerging markets will eventually collide everywhere, including Thailand. But if we prepare well, we can be good, different, and immune starting today," Kobsak concluded.

Kriengkrai Thiennukul, vice president of the Federation of Thai Industries (FTI), offered more reasons to hope as he recounted how Thailand had rebounded from recent economic shocks.

“In the last 10 years, we’ve seen global challenges, starting with digital transformation or disruption,” he said. Noting that even the strongest businesses can collapse quickly due to this rapid change, he said that Thai companies were busy trying to figure out ways to survive disruption.

After digital disruption came the China-US trade war, catching Thailand in the crossfire as a trade partner of both countries and an important link in the global supply chain. But one Thai industry that flourished, said Kriengkrai, was air-conditioner manufacturing because the US was ordering from Thailand instead of China.

“After that, we faced the Covid-19 crisis, which was horrible, but it was an opportunity for [Thailand’s] medical textile industry, where products such as reusable and washable PPE suits made from automotive parts could be exported.”

Next came the Russia-Ukraine war that sent costs soaring for SME businesses, with inflation hitting the price of fuel and consumer goods.

“In the global market, demand for food is high and Thailand ranks as the world’s 13th food exporter and looks set to reach the top 10 by the end of 2022,” he said.

“After inflation comes recession, which is expected to happen soon, but on the bright side, the baht will weaken which will give us an advantage.”

The final challenge would be climate change, which Kriengkrai described as “humanity’s biggest problem”.

 

Sangchai Theerakulwanich, chairman of the Federation of Thai SMEs, said that although the fundamental economic structure had improved, problem-solving had decreased. With income falling, Thailand's only chance of survival was to increase GDP.

"The Covid-19 epidemic is in its third year and will continue to affect businesses, particularly SMEs," he added.

He called for more domestic investment via low-interest financing for small and medium-sized enterprises, and skills training to meet current and future demands. Meanwhile, Thailand’s bio-circular-green (BCG) economy should be boosted to help SMEs.

Reducing debt (bad, informal and household debt) would enable the SME rehabilitation fund to offer more low-cost funding sources for entrepreneurs, reducing unemployment and lowering the government spending burden, he added.

Chaichan Chareonsuk, chairman of Thai National Shippers' Council (TNSC), noted healthy figures for Thailand’s main food export, with 3.5 million tonnes of rice shipped in the first six months, which is expected to rise to 7 million tonnes by the end of this year. He added that the Russian-Ukraine war and global crisis had driven up Thai food exports.

And although Thai exports to China only grew 0.8 per cent in the first half thanks to its zero-Covid policy, exports to Asean rose 28 per cent and 24 per cent to CLMV (Cambodia, Laos, Myanmar and Vietnam).

TNSC forecasts Thai exports to grow 6.2 per cent overall this year. Chaichan said Thailand’s export strategy should focus on emerging markets such as India, the Middle East and Asean. The target should also be to reduce costs and boost liquidity, he added.

Thai Agriculturist Association president Pramote Charoensilp said the outlook for Thailand’s agro-export industry was bleak. Farmers were struggling with low market prices, productivity, and competitiveness in the global market, despite the falling baht.

Thailand was benefiting from higher exports of fertiliser after the Russia-Ukraine war hit global supply. But on the downside, Thai rice was losing out to Vietnam’s cheaper product on the world market.

Pramote urged the government to help the farm sector with production costs so that it could survive and advance.

Furthermore, the event included a session topic on "How the Thai economy will evolve?" from representatives of the country's various political parties to demonstrate their vision such as Suwat Liptapanlop( President of the Chart Pattana Party),Dr. Pisit Leeahtam(The Democrat Party),Supant Mongkolsuthree(Chief of the Thai Sang Thai Party),Sontirat Sontijirawong(Secretary-general of Palang Pracharath Party),Attawit Suwanpakdee(Secretary-general of Kla Party,Paopoom Rojanasakul(Deputy Secretary -General of the Pheu Thai Party)