Thai economy faces maze of challenges in post-Covid era

Wichulada Pakdeesuwan

All eyes are on the post-Covid-19 scenario after a year and half of pain and hardship for everyone.

The outlook for the Thai economy after the pandemic is difficult to predict because we have no idea when it will be over, says Finance Minister Arkom Termpittayapaisith. Undoubtedly, the economy will recover and the situation will be much better than the present, he says.

Arkom admitted that the third wave of the pandemic had severely impacted the Thai economy.

“Vaccination is the hope for the people. We can see a chance for the economy and tourism to rebound in the fourth quarter of this year.”

Three kinds of economic vaccinations are needed to revive the Thai economy, he says.

“First is the vaccine for the macroeconomy or at the national level for the stabilisation of the economy. We must make sure that the inflation rate is not too low, we have a non-negative interest rate, maintain a stable national reserve fund, and have low liabilities burden.

“The second is the vaccine for the real economic sector, which builds immunity in the business sector. The government should allow the private sector to play a greater role in investment to create new economic fundamentals, especially investment in a new S Curve in the Eastern Economic Corridor.

“The third is vaccination at the public level to create more jobs and stable income for the people. The government must help SMEs [small and medium-sized enterprises] with easier access to financial resources,” says Arkom.

Those vaccines will become the main engine for the Thai economy to grow sustainably, strongly, and be resistant to future crises, he said.

Amornthep Chawla, head of research office at CIMB Thai Bank, said that in the post-pandemic scenario, the Thai economy will face “4D challenges” in the next 3-4 years as follows:

“Disease – the re-emergence of new pathogens. We have to live in a new normal situation with stringent travel control measures.

“Disruption – changes due to technology. We must develop human resources to serve the changing circumstances.

“Deglobalisation – rebound of globalisation. Geopolitical conflicts will increase, so Thailand must be well balanced. We should not take sides. Thailand should not rely too much on tourism or exports as in the past. Instead, the country has to strengthen its domestic economy to cope with volatilities that may arise from external factors.

“Democracy – a political issue that impacts and hampers investor confidence.

“After crises in the past, the Thai economy has tended to grow lower than its real competence. After the Tom Yum Kung crisis in 1997, the Thai economy grew only 5 per cent, compared to its previous growth rate of 10 per cent. Thus, the Thai economy is at a long-term risk to grow below 3 per cent a year for the next five years from now, reflecting the emergence of an ageing society, and disruption,” he indicated.

Naris Sathapholdeja. head of TMB Analytics, said among challenges facing the Thai economy are a need for restructuring Thai SMEs, reviving those that were sick for full recovery, and

reforming the economic structure to follow the new global supply chain to compete with other countries. “During the past 10 years, Thailand has been exporting the same products, while Vietnam and Malaysia have diversified according to the world’s changing demand,” Naris said.

“If we do not restructure and transform, the Thai economy will grow only 2-3 per cent, whereas we have the potential to grow at over 4 per cent a year. It is difficult to have a high number of tourists, like 40 million a year, as in the past,” he emphasised.

Pipat Luengnaruemitchai, chief economist and head of research group at Kiatnakin Phatra Securities, pointed out that several signs showed the Thai economy was “losing” competitiveness. “We don’t see new forms of investment, as a result Thailand’s economy relies largely on the tourism and hospitality sector,” Pipat said.

“The pandemic has rung the alarm bell for us. We won’t be able to see the high growth rate of the past. There won’t be 40 million foreign tourists. The tourism sector will go into a state of rebuilding from a serious collapse, and there is no way to go back to the way it was.

“Presently, many countries like Taiwan, South Korea, China and

Vietnam are enjoying strong export growth of more than 40 per cent since they have turned to compete on technology. The US is no longer

competing with China on tariffs but competing with technology in the new world,” he added.

“Meanwhile, there is no investment in such technology in Thailand. Although today we feel good that exports are growing at 15-20 per cent, other countries’ exports have grown beyond the pre-Covid-19 pandemic levels. Thailand can’t grow without new investment,” Pipat said.

Charl Kengchon, executive chairman at Kasikorn Research Centre,

said that the Thai economy would face many problems in the next few years, including fiscal problems as the government has made changes in

budget deficit policy.

“The government’s loans could come at a cost as public debt

balloons from relentless stimulus via fiscal policy. From now onwards, the Thai government must try to reduce the debt burden, focus more on fiscal limitations, and find ways to increase revenue to help reduce the debt incurred during the pandemic,” Charl said.

Other challenges for the Thai economy are industrial transformation, an ageing society that could cause shortage of labourers, and low competitive advantages.

Thailand has many things to develop in the next three years, such as free trade agreements to ensure it survives in a disruption, he said.

“The Thai economic growth in the next few years will prove whether we have done enough transformation oWichulada Pakdeesuwan

 

 

All eyes are on the post-Covid-19 scenario after a year and half of pain and hardship for everyone.

The outlook for the Thai economy after the pandemic is difficult to predict because we have no idea when it will be over, says Finance Minister Arkom Termpittayapaisith. Undoubtedly, the economy will recover and the situation will be much better than the present, he says.

Arkom admitted that the third wave of the pandemic had severely impacted the Thai economy.

“Vaccination is the hope for the people. We can see a chance for the economy and tourism to rebound in the fourth quarter of this year.”

Three kinds of economic vaccinations are needed to revive the Thai economy, he says.

“First is the vaccine for the macroeconomy or at the national level for the stabilisation of the economy. We must make sure that the inflation rate is not too low, we have a non-negative interest rate, maintain a stable national reserve fund, and have low liabilities burden.

“The second is the vaccine for the real economic sector, which builds immunity in the business sector. The government should allow the private sector to play a greater role in investment to create new economic fundamentals, especially investment in a new S Curve in the Eastern Economic Corridor.

“The third is vaccination at the public level to create more jobs and stable income for the people. The government must help SMEs [small and medium-sized enterprises] with easier access to financial resources,” says Arkom.

Those vaccines will become the main engine for the Thai economy to grow sustainably, strongly, and be resistant to future crises, he said.

Amornthep Chawla, head of research office at CIMB Thai Bank, said that in the post-pandemic scenario, the Thai economy will face “4D challenges” in the next 3-4 years as follows:

“Disease – the re-emergence of new pathogens.