Thai economy faces major challenges, needing urgent action: SCBX chief

Arthit Nantawittaya, chief executive officer of SCBX Plc, expressed his concerns about the Thai economy in the aftermath of the Covid crisis, in an interview with Krungthep Thurakij media.

He pointed out that a majority of the Thai population was struggling, with inadequate income. Some individuals had to resort to loans for their living expenses, leading to a further increase in household debt. Arthit emphasised the need for assistance and warned that the Thai economy was in a critical condition, which may not be apparent to most people.

Weakening economy

Arthit said he was worried about the widespread debt and insufficient income, and questioned whether the overall Thai economy was truly recovering or still mired in a crisis.

Examining the economic landscape over the past two quarters, various indicators suggest that the Thai economy is gradually weakening, particularly affecting the lower-income groups, who constitute a significant portion of the population, he said. They may be facing an income crises, unable to meet expenses or sustain their livelihoods, leading to a growing household debt problem.

Multiple perspectives from the private sector align in recognising the challenges, especially major companies like SCBX Plc, which still see significant hidden issues in the Thai economy. Despite some signs of economic growth, household debt and longstanding structural problems are eroding Thailand's growth potential, he lamented.

Covid took a heavy toll

Arthit said Thailand’s economy had been heavily impacted by the pandemic. The economy, heavily reliant on tourism and exports, faces challenges due to changing consumer behaviour and product patterns, significantly affecting Thailand's competitive ability, he said. This has resulted in more severe consequences for Thailand compared to other countries facing a similar crisis.

Historically the Thai economy has expanded at an average rate of 4-5% annually, primarily driven by a specific group. The upper classes, in particular, with rapid adaptability and strength in both capital and opportunities, have played a significant role. Despite the overall economic growth, it conceals underlying problems and disparities, he said.

Arthit said that Thailand's economy may not be growing as it should, with one of the problems arising from structural issues. Factors such as competitiveness, the inability to invest or expand into new businesses, and the impact on weaker or less resilient groups are contributing significantly to the challenges faced by the Thai economy.

He discussed the challenges faced by a particular group of people in Thailand and harped on the need for genuine assistance and a sustainable plan for economic recovery. Arthit stressed the importance of injecting new energy into the economy and addressing the root causes of the economic issues.

He also mentioned that without real assistance and a fresh approach, expecting the economic system to recover on its own would be difficult. Arthit stresses the necessity of introducing new fuel into the economy, regardless of the form it takes, to move forward. However, he points out that if the majority of the population is not ready for change, urgent attention must be given to addressing these immediate concerns.

Over the past few years, attempts have been made to address issues, but without a sustainable plan to increase income and provide long-term opportunities, the problems persist. It raises questions about the overall Thai economy's ability to recover and whether it might still be in a crisis.

The discussion extends to the impact of the Covid-19 pandemic on Thailand's economy, particularly its heavy reliance on tourism and exports. The changing global landscape has affected Thailand's competitiveness and economic growth potential, with consequences more severe than in other countries.

Ballooning household debt

Arthit highlighted the historical economic growth of Thailand, driven primarily by a specific group. Despite the overall growth, disparities and underlying problems remain.

Arthit expressed concern about the growing household debt crisis, which is especially affecting those with low to moderate incomes. The Thai economy is grappling with urgent issues related to debt, which are not easily solvable in the short term. Accumulated problems include low incomes, insufficient livelihood, and a significant number of informal loans. Addressing these issues requires a multifaceted approach, involving both income enhancement and resource allocation to provide opportunities for the majority of the population.

He suggested that immediate measures, coupled with a long-term plan, are essential to address both short-term and long-term economic challenges.

Need for short-term stimulus

A short-term economic stimulus is necessary, said Arthit, pointing out that injecting money into the economy, especially at the micro and local levels, could help boost consumption and support trade. However, the long-term plan should focus on creating sustainable income opportunities.

Arthit acknowledged the positive aspects of Thailand, but spoke of the need for increased investment, especially in new technologies and addressing climate change, which has been lacking in recent years.

Interest rates likely to go down

Arthit anticipates a reduction in interest rates globally, influenced by major economies. This trend is expected to exert downward pressure on interest rates in Thailand. As the global and Thai economies face such pressure, there is a high likelihood of a decrease in interest rates in Thailand, especially after major economies have already lowered their rates.

Regarding the impact of past interest rate hikes, banks have been cautious in managing customer relationships to avoid adverse effects on those who have been significantly impacted in the past 3-4 years. Measures have been taken to help customers, including debt restructuring, interest rate exemptions, and adjustments to facilitate a reduction in customer interest rates during the crisis, he said.

Arthit said it was important to have unity and cooperation to overcome the challenges. He acknowledged that Thailand had the potential for recovery, especially with the new government's commitment to addressing various dimensions of the issues.

He urged all sectors to work together for the benefit of the country and its citizens, emphasising the need for collaboration and collective effort to navigate the challenges and build a stronger future.