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Aging society and skill shortage key issues in Thailand’s economy

According to Moody’s latest Research Announcement, Thailand will sustain fiscal and external strength regardless of political developments; but structural challenges persist.

Boris Sullivan

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13 June 2019 Singapore, June 13, 2019 — —Thailand will likely maintain continuity on infrastructure investment, after the country’s recent election results.

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But its ageing society, moderate competitiveness and labour skills shortages remain key credit challenges.

Moody’s Investors Service has just released an FAQ on the Government of Thailand (Baa1 stable), analysing the outlook for policy, growth and structural reforms, against the backdrop of global trade tensions.

Moody’s report also examines the impact of Thailand’s elections in March 2019.

Moody’s expects policy continuity on the country’s 20-year national strategy, including investment in the flagship Eastern Economic Corridor. However, opposition to the ruling coalition’s slim majority in the lower house of parliament could delay the implementation of certain policies.

On the issue of how Thailand’s fiscal and external position will evolve, Moody’s says that Thailand will likely sustain its strong fiscal position, regardless of political developments, because of the country’s track record of adhering to fiscal rules, a factor that also supports Moody’s assessment of very high policy effectiveness.

Ongoing inflation within target and financial stability are factors that underscore the country’s monetary policy effectiveness, and persistent balance-of-payments surpluses will continue to bolster foreign exchange reserves and contribute to low external vulnerability risk.

Thailand’s ageing society to weigh significantly on growth potential.

However, absent significantly higher migration, the aging of Thailand’s society will weigh significantly on growth potential.

Moreover, while data indicate that Thailand’s education standards are higher than the average for countries with similar incomes, they remain lower than some rating peers and Asian neighbours.

In the absence of ongoing policy reform, this situation will exacerbate demographic and skills constraints, and weigh on economic competitiveness.

As for the impact of the US-China trade dispute on Thailand’s economy, Moody’s says that while exports to China are declining, Thailand’s exposure to China is more moderate than for other Asia Pacific economies.

Research: Moody’s – Thailand will sustain fiscal and external strength regardless of political developments; structural challenges persist – Moody’s

Economics

The Future of Asia: greener but with a public and private debt hangover

The COVID-19 pandemic has been a perfect storm, destroying jobs, worsening poverty and inequality, and creating a public and private debt problem—especially for countries and firms already in fragile financial health beforehand

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The Sydney Opera resumed live performances and the city of Melbourne recently hosted the Australian Open tennis tournament with fans (mostly) in attendance.

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Economics

50:50 campaign may not get immediate extension

National News Bureau of Thailand

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BANGKOK (NNT) – The government’s 50:50 co-pay campaign expiring on 31st March may not be getting an immediate campaign extension. The Minister of Finance says campaign evaluation is needed to improve future campaigns.

The Minister of Finance Arkhom Termpittayapaisith today announced the government may not be able to reach a conclusion on the extension of the 50:50 co-pay campaign in time for the current 31st March campaign end date, as evaluations are needed to better improve the campaign.

Originally introduced last year, the 50:50 campaign is a financial aid campaign for people impacted by the COVID-19 pandemic, in which the government subsidizes up to half the price of purchases at participating stores, with a daily cap on the subsidy amount of 150 baht, and a 3,500 baht per person subsidy limit over the entire campaign.

The campaign has already been extended once, with the current end date set for 31st March.

The Finance Minister said that payout campaigns for the general public are still valid in this period, allowing time for the 50:50 campaign to be assessed, and to address reports of fraud at some participating stores.

The Fiscal Police Office Director General and the Ministry of Finance Spokesperson Kulaya Tantitemit, said today that a bigger quota could be offered in Phase 3 of the 50:50 campaign beyond the 15 million people enrolled in the first two phases, while existing participants will need to confirm their identity if they want to participate in Phase 3, without the need to fill out the registration form.

Mrs Kulaya said the campaign will still be funded by emergency loan credit allocated for pandemic compensation, which still has about 200 billion baht available as of today.

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Economics

Customs Department Considers Measures to Help SMEs

National News Bureau of Thailand

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BANGKOK (NNT) – The Customs Department is seeking ways to reduce the impact of the exemption on import tax and value-added tax (VAT) for imported goods worth up to 1,500 baht, as such measures are hurting small and medium-sized enterprises (SMEs).

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