After the release of the federal budget, financial experts predict that the situation will bottom out in the next half of the month. However, the market is currently at one of its worst points.
According to Nonarit Bisonyabut, an economist at the Thailand Development Research Institute ( TDRI), things typically seem to be at their worst just before things start to improve.
Mr. Nonarit attributed a short-term decline in the country’s economy to a number of factors, most notably the slow funding of the federal budget and great domestic and international interest rates, which discourage investment.
Politics a probable move
He claimed, however, that as interest rates drop globally, the position will increase. Interest rates were just lowered by the European Central Bank, and the US is projected to experience another reduction this season.
” I’m calling it the’ 4am business’ because we’ll view a ray of light immediately. We’ve seen lower interest rates, he said, with Thailand likely to follow suit and the US expected to make four cuts next month.
Mr. Nonarit stated that as soon as the details of government jobs are made clear, state spending may start in May and may continue to increase. The trade industry, however, is showing signs of improvement, and so is the global market.
” That means we’ll be entering the sun, and the sector is expected to start growing again”, he said.
But, a nation’s economic growth depends heavily on its ability to meet the needs of the world’s economy and address challenges brought on by an aging society.
Also, the state of politics is also retard the economic treatment, particularly if Prime Minister Srettha Thavisin is removed from office, causing social problems.
In the most recent cabinet reshuffle, Pichit Chuenban was criticized for his controversial appointment as the PM’s Office secretary. 40 lawmakers, who had accused the prime minister and Pichit of breaking government minister morals, started the investigation.
They asked the court if the pair should be removed from office under Section 160 ( 4 ) and ( 5 ) of the constitution, which deals with the ethics of cabinet ministers.
They claimed that Pichit, who had represented Thaksin Shinawatra in a corruption case in 2008 and spent time in jail for contempt of court, was inadequate to hold a cupboard position.
The social climate also affects the business. If the land has to find a new prime minister, state laws will be further delayed”, Mr Nonarit said.
Nonarit: Politics may trick recovery
Digital pocket the main concern
The TDRI researcher asked whether the Pheu Thai-led administration’s policies over the past nine months have had an impact on the economy, noting that the government is focusing more on the digital budget plan than other small-scale monetary measures.
” The state has to save money for the cash handout program, so there are no smaller initiatives to wax the rims”, he said.
There remains a major question mark over foreign assets, he said. Although some major companies claim they intend to travel to Thailand, it is too early to say whether the prime minister’s outside journeys will have any impact.
” There are basic factors that may pull investments, such as human resources and skill set. He claimed that this is the major challenge, and that long-term planning is required to handle this.
According to Mr. Nonarit, the government should take short-term steps and begin addressing economic reforms, particularly building the workforce to support the business, once political uncertainty has vanished and social security has been established.
Weak imports, lower paying
Tanit Sorat, vice- chairman of the Employers ‘ Confederation of Thai Trade and Industry ( EconThai ), said the export sector, which is traditionally Thailand’s driving force, remains weak, so supply chains have been affected.
Due to the low purchasing power of local and international markets, the industrial firm’s production accounts for 60 % of its full potential.
As a result, the services, logistics, employment and transport industries are all suffering from this downturn of financial activity.
The circumstance for companies has become worse as a result of global factors, including the US-China trade war and the Middle East’s tensions, particularly those involving shipping vessels in the Red Sea.
A high level of household debt has caused a negative situation for companies and raised cash concerns for businesses as a result of poor customer spending.
” Only the tourism industry seems to be surviving, but the sector makes up for 8 % of the country’s GDP”, he said.
On international investments, he said businesses make lengthy- term expense plans, which are not likely to be halted only by social issues.
Last year saw investment principles of more than 600 billion rmb, of which 70 % was the result of foreign direct investment.
Government” sitting on its arms”
In the past nine times, Mr. Tanit claimed that the government has hardly done something. The government chose to wait for the electronic wallet system rather than start a signal program to increase profitability and start a bill suspension.
The prime minister should have started working right away because he is a businessman. He is aware that businesses require small incentives and debt payment suspensions to keep up with rising household debt. He thinks like a politician, not a businessman”, he said.
He noted that the car manufacturers ‘ supply chain has experienced a 23 % contraction, and that other struggling industries include sugar, cassava, and rubber.
Half of export clusters have also contracted, and without government intervention, the supply chain will be dragged down, he noted.
The government should develop a plan to increase public spending and increase production while the rollout of the digital wallet is in progress. Operating at 50–60 % of their total capacity, businesses will not be able to retain workers, he said.
” Can the government also suspend debt for a year?” This is a short- term measure. And for the digital wallet, the government should ensure it can be spent anywhere, not just in convenience stores”, he said.
Tanit: Export sector remains weak
The ruling party, according to deputy finance minister Paopoom Rojanasakul, has always said that the nation is experiencing economic stagnation and that the digital wallet handouts are intended to lift it from its slumber.
Mr. Paopoom attributed the slow economy to three factors: the inaction of the 2024 fiscal budget, ineffective fiscal and monetary measures to stimulate the economy, declining consumer confidence in spending, and contraction in loans, particularly for small and medium-sized enterprises ( SMEs ).
” In short, the fiscal sector lacks ammunition, and while the monetary sector has it, it refuses to use it. Banks are cautious about extending loans as a result of this. With all these elements, the country’s economy is sluggish”, he said.
State funds begin to flow.
Mr. Paopoom claimed that funds have been injected into the system since the 2024 fiscal budget bill was finally approved after a protracted delay.
Additionally, measures are now in place to accelerate investments in state enterprises which meet 95 % of the government’s target.
More money will be injected into the system as a result of the rollout of the digital wallet scheme, which is scheduled to take effect in October of this year.
The deputy finance minister claimed that due to the slow production and lack of consumption, Thailand has lost its appeal.
He acknowledged that business decision-making depends also on political stability. He expressed confidence in the government’s efforts to solve the country’s economic problems and the introduction of a number of fiscal measures, including soft loans, as well as upcoming loan guarantee measures.
Central bank must play a role
He argued that the Bank of Thailand must cooperate with the government in order to carry out its measures, and he also emphasized the necessity of interest rate reductions.
We have remained unwavering about the necessity of lowering interest rates because they do not conform to the economic conditions. Interest rates appear higher than they should be with the current inflation rate of 0.6 % to 0.7 %, which is below the lower 1 % threshold.
Mr. Paopoom added that much-needed reforms like the Virtual Bank project, credit guarantee upgrades, and the retirement lottery policy are in the works and that the economy is on track to recover, particularly in the second half of this year.
Paopoom: Banks cautious about extending loans