After a whirlwind few weeks with Paetongtarn Shinawatra taking the helm as Thailand’s new prime minister, Thailand’s struggling economy needs a clear strategy moving forward to get it back on track, according to some analysts.
The country’s economy has been sluggish and isn’t growing as fast as hoped.
Thailand has the second-largest economy in Southeast Asia, though its annual growth is slower than many of its regional neighbors.
Initial forecasts put Thailand with a GDP growth of 3% for 2024, but its new revised growth is 2.7%, according to Thailand’s Finance Ministry.
Kiatanantha Lounkaew, an economic lecturer at the Thammasat University in Bangkok, said there are two major problems holding Thailand back.
“The household debt per GDP is high, approaching 90%,” he told VOA.
“Secondly, our economy has been operating with the same structure since the year 2000, and that is why our competitiveness has been eroding. We can’t compete in the municipal [foreign direct investments] compared to our regional partners.
“We must have a clear strategy roadmap for Thailand for the next three years. The picture must be credible. Thailand will then be recovered fully, economically, socially and politically,” Kiatanantha said.
Manufacturing, agriculture and services
The three main economic industries driving Thailand’s gross domestic product are manufacturing, agriculture and services.
But manufacturing, for example, has slowed, with nearly 2,000 factories closing last year alone, leading to thousands of lost jobs, local media report. Cheap imports from places such as China, are a factor in Thailand becoming uncompetitive.
Thailand needs to come up with innovative ways to use technology to aid its key sectors, such as agriculture, according to Kiatanantha.
“We have been a technology user for a long time, we can use technology in a smart way to increase our core economy. For example, [shifting] agriculture into smart farming to something more value added, rather than sending out the raw materials.”
And foreign direct investments (FDIs) are also important to Thailand, with countries like Japan, Singapore, the U.S., and China making significant investments in Southeast Asia countries in recent years.
But the labor force is limited, and more training is also needed to attract further FDIs, including in technology.
“The quality of our labor force to cater to a new technology is not that high, and the number of people qualified for such technology is still low,” he said. “We need to produce people with good human capital, so the investor will be confident that when they come to Thailand, they will be able to find suitable people to build a position.”
‘Thailand has lost its footing’
Thailand’s political changes haven’t helped matters either.
Earlier in August, Thailand’s Constitutional Court’s swiftly removed Srettha Thavisin as prime minister over an “ethical violation” for his role in appointing a member of parliament (MP) to his cabinet who had been imprisoned for an alleged attempt to bribe an official.
Thitinan Pongsudhirak, a political analyst, said Thailand’s economy has long had problems because of the political instability in the past two decades.
“Since 2006, Thailand has lost its footing. Two military coups [2006 and 2014]. Elections, multi-major parties dissolved. We’ve had three constitutions along the way. The trajectory shows me we are seeing signs of economic stagnation and political decay,” he said Wednesday at the Foreign Correspondents Club of Thailand in Bangkok.
The removal of the prime minister paved the way for Pheu Thai leader Paetongtarn Shinawatra to be elected as Thailand’s new prime minister.
That marked the return of another Shinawatra as Thailand’s premier. Paetongtarn Shinawatra is the youngest daughter of Thaksin Shinawatra, a former prime minister who recently returned to Thailand following 15 years in self-exile.
In his first public speech since leaving Thailand in self-exile, Thaksin laid out a 14-point strategy to fix the country’s economy, ranging from reforming the public debt, the agriculture sector, empowering tourism, promoting investment into entertainment complexes and the use of locally made products.
But Thitinan, the political analyst, said Thailand must be looking toward digitalization.
“Now I think the dial has moved on, they have to be talking about much more digitalization, digital economy, AI, machine learning, education reform,” he said. “Thailand has missed the semi-conductor innovation, the tech boom and now it is missing the AI burst, and the reason is because of the domestic political situation.”
After government upheavals in recent years with decisions from Thailand’s monarchy, military and judiciary, Thitinan is unsure how long this Shinawatra government will last.
“Now we have a Thaksin 2.0 government, but it’s a shell of itself 20 years ago,” he said. “I’m wondering whether they will be allowed to govern — or continue to be stymied. If it isn’t, Thailand will go nowhere, it will be at a standstill and regress.”
“But,” Thitinan later told VOA, “at least there is a plan.”
Plan aims to give citizens money
One of the controversial policies still up in the air is Thailand’s Digital Wallet scheme, a program aimed at giving 10,000 baht ($275) to 50 million citizens in digital money to spend locally to stimulate the economy. It was a campaign promise from the Pheu Thai party during the 2023 elections.
Thaksin recently said the plan will begin in September. This is despite speculation that government lawmakers want to scrap the idea.
But political analyst Thitinan said its impact will be diluted.
“It will come from the current budget year and the next budget year. So, the effects will be diluted,” he said. “And in order to be effective, you need to have a big fiscal boost in a short time and let that create multiplier effects.”
If it goes ahead, it will cost the Thai government an estimated $13.8 billion. At least 20 million people have registered for the plan.
The only industry seen as thriving economically is Thailand’s crucial tourism industry. At its peak in 2019, tourism accounted for 11.5% of the country’s overall GDP.
By August, there were 21 million visitors to Thailand, with about 36 million forecasted by the end of this year.
Thailand recently relaxed entry rules so tourists from 93 countries will now be permitted 60 days on arrival. A Destination Thailand Visa also was launched that allows digital nomads to live, work and travel in the country.
Kiatanantha, the economic lecturer, said more tourism is a “good sign,” but improvements are needed.
“[Tourism] focuses on a few tourism attractions like Bangkok, Phuket and in Chiang Mai and Chiang Rai. Until [tourism income] is a distributed benefit to other regions, that’s a problem,” said Kiatanantha.
“The health sector has potential. It can combine with the tourism sector to generate a bigger sector where people come for leisure and some health checkups or wellness, and that’s the sector that we are good at,” said Kiatanantha. “Tourism is still a goal, but it has to be a sustainable one. We need to attract tourism with more purchasing power.”
