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Thailand’s Prime Minister, Srettha Thavisin, has stated that the country’s economy needs a significant boost in order to increase growth, alleviate household debt, and improve livelihoods. He emphasised the need for long-term solutions such as negotiating free trade agreements and attracting foreign investment.
Thailand’s new Prime Minister, Srettha Thavisin, a former property tycoon, is under pressure to revive the country’s economy. The government has announced several stimulus measures, including a digital cash handout of 10,000 baht for every Thai adult, but concerns remain about funding and conditions.
The government aims for 5% annual economic growth over the next four years, but structural issues like an ageing population and low labour productivity need to be addressed. Attracting foreign direct investment and implementing comprehensive reforms are crucial for economic success.
Thailand’s annual growth rate over the past decade is the lowest in the region
Prime Minister Srettha Thavisin emphasised the need for significant measures to improve Thailand’s under-performing economy and accelerate its growth rate. Thailand’s annual growth rate over the past decade has averaged just 1.8%, the lowest in the region, while household debt has risen to 90% of GDP.
According to the World Bank, Thailand’s economy grew at an average annual rate of 7.5% in the boom years of 1960-1996 and 5% during 1999-2005 following the Asian Financial Crisis. This growth created millions of jobs that helped pull millions of people out of poverty. However, from 2010 to 2020, Thailand’s annual growth rate averaged only 2.8%, which is lower than the regional average of 4.8% for East Asia and Pacific.
One of the main reasons for the slowdown is the stagnation in productivity, which reflects the limited innovation and investment in the economy. Private investment declined from more than 40% in 1997 to 16.9% of GDP in 2019, while foreign direct investment flows and participation in global value chains have shown signs of stagnation. Moreover, the COVID-19 pandemic has dealt a severe blow to the economy, causing a contraction of 6.1% in 2020, which is the second sharpest full-year economic contraction in the past 25 years. The pandemic has also increased poverty and inequality, as many households have lost their income and livelihoods.
To address this, the government has provided short-term relief such as debt moratoriums for farmers and reductions in power and fuel prices and train fares. However, the prime minister also stressed the importance of negotiating free trade agreements with more countries to find new markets for Thai exports in the middle and long term.
Exploring New Markets and Business Opportunities
Prime Minister Thavisin highlighted the strategic significance of his official visits to other countries. These visits were not merely introductory in nature but also aimed at exploring new markets for Thai products and attracting foreign investment to Thailand.
The prime minister expressed confidence in Thailand’s potential for economic and social development, encouraging foreign investors to establish production facilities in the country to boost exports. Additionally, he mentioned the land bridge project in southern Thailand, which will serve as a logistics hub and offer faster transit times for cargo vessels and oil tankers.
Achieving Growth and Improving Livelihoods
Thavisin acknowledged the attractive working conditions for many Thais in Israel despite ongoing conflicts, emphasizing the importance of improving livelihoods domestically. To achieve this, he stated the need for a comprehensive boost to the economy.
But to address long-term existing challenges and revitalize its growth potential, Thailand should prioritize implementing structural reforms aimed at enhancing productivity, competitiveness, and innovation. Key areas that require reform include enhancing the business environment, investing in human capital, promoting digital transformation, strengthening social protection measures, and addressing environmental concerns.
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