Thai economy faces scrutiny amid recession fears and slow pandemic recovery

The Thai economy is in the spotlight as concerns over a looming recession persist due to the nation’s weak export outlook and slow recovery from the pandemic.

Last week, the government faced heavy criticism from opposition parties and business leaders during a Thai economy policy debate, with the latter expressing concerns over the lack of detail in the 43-page policy statement on economic recovery plans.

The government’s stimulus projects like the 10,000-baht digital wallet scheme, which requires an estimated 560 billion baht budget, have raised questions about the sourcing of funds. Despite this, independent political and economic analyst, Somjai Phagaphasvivat, argued that there are no signs of a recession in the Thai economy.

“The chance of a recession is very low unless there is an economic crisis, such as a rapid surge in energy prices.”

Somjai also highlighted the government’s economic stimulus measures, including the digital currency handout scheme, which is projected to add 1% to GDP growth next year. The National Economic and Social Development Council previously reduced its economic growth forecast for 2023 to 2.5-3% due to the global economic slowdown.

The tourism industry, which contributes 23% to the country’s GDP, has been a bright spot in the Thai economic recovery. It is expected to further boost economic growth as foreign arrivals are projected to hit 28-29 million this year, rising to 30 million next year, and almost reaching the 2019 tally of 40 million in 2025.

Tourism operators, however, have concerns over the minimum wage hike as this measure remains unclear. The government recently set a new goal to increase foreign tourism receipts to 3 trillion baht, up from 1.9 trillion registered in 2019.

Chaichan Chareonsuk, chairman of the Thai National Shippers’ Council, said Thailand does not meet the criteria for an economic recession. He characterised the current Thai economy as a technical recession or short-term slowdown limited to this year.

“The economy this year is sluggish, in a slow-growth phase, but has not reached a recession.”

Meanwhile, the Employers’ Confederation of Thai Trade and Industry (EconThai) suggested that the current economic conditions should not cause a recession. Tanit Sorat, vice-chairman of EconThai, said the Thai economy will be affected by the slowdown in other countries, especially the US and Europe, but he remained optimistic, reported Bangkok Post.

“With Thai GDP expected to grow by more than 2% this year, we are not that worried.”

Follow more of The Thaiger’s latest stories on our new Facebook page HERE.