'Can't compete, can't adapt in time': Why Thailand minister says economy nearly in crisis

Aug. 21, 2024, 6:41 a.m.

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Thailand’s economy is teetering on the brink of crisis, burdened by declining exports and an increasingly uncompetitive manufacturing sector, the nation’s caretaker finance minister warned on Wednesday (August 21).

Exports account for a significant portion of Thailand's economy, reaching 70 percent, but the manufacturing industry is finding it difficult to meet market demands, according to Pichai Chunhavajira, who was speaking at a business forum.

“We can’t compete. We can’t adapt in time,” the capital markets veteran said without pulling any punches.

Advertisement Pichai assumed the position of Thailand's finance minister in April after a cabinet reshuffle initiated by former Prime Minister Srettha Thavisin.

Before his removal, Srettha, a political newcomer, had embarked on a global tour to attract foreign investment, eased regulations to boost tourism, and introduced measures aimed at reducing debt burdens for farmers and students in an attempt to break a decade-long pattern of economic growth below 5 percent.

Thailand, the second-largest economy in Southeast Asia, recorded a growth rate of 2.3 percent in the April-June quarter compared to the same period last year, an improvement from the 1.6 percent growth observed in the first quarter. However, growth on a quarterly basis slowed to 0.8 percent in the second quarter, down from 1.2 percent in the preceding three months.

Economic forecasts

The finance ministry predicts a 2.7% economic growth rate for 2024, following last year's modest 1.9% growth, which trailed behind other economies in the region.

The World Bank presents a slightly less optimistic forecast, projecting growth to rise from 1.9% in 2023 to 2.4% in 2024. By 2025, growth is anticipated to reach 2.8%, driven by both domestic and international demand.

According to the World Bank, the economy is expected to recover in 2024, fueled by consistent consumer spending and a rebound in tourism and goods exports.

Meanwhile, the central bank is widely expected to keep its benchmark interest rate at a decade-high 2.50% for the fifth consecutive meeting later on Wednesday.

Advertisement With inputs from Reuters