Thais Still Waiting For PM Srettha To Rescue Economy From Doldrums – Analysis

By Jitsiree Thongnoi

As the owner of a vending machine business in northeastern Thailand, Rakti Yuankrathok is at a vantage point to gauge local spending. 

The outlook is dim. People are buying fewer snacks and beverages dispensed by his machines, said the 59-year-old entrepreneur based in Khon Kaen province.  

“We have seen a reduced spending power and we have decided to remove many of our vending kiosks,” Rakti told BenarNews. “People had spent less since the Covid years, and this has not changed since Covid ended.”

Rakti said this was partly why he put plans on hold to expand his other businesses, which are in logistics and real estate. He also had difficulty obtaining loans for an expansion of his small enterprise.

Rakti said he had hoped that Thailand’s first civilian-led government after nearly a decade of military rule would solve its economic problems and foster a more positive climate. 

But so far, he said, “it has not been as expected.” 

“It’s not that people think harder before spending, but they don’t have the means to spend at all,” he said. 

Since taking power nine months ago, Prime Minister Srettha Thavisin has embarked on a mission to revitalize Thailand’s economy through a combination of populist policies, global diplomacy, and mega-projects. 

To help spur a post-pandemic recovery, this former real estate tycoon has traveled the world to try to raise the country’s international profile and drum up foreign investment. Despite all that, sobering news lately about still-sluggish growth has dampened the Srettha government’s ambitious economic agenda.

While on the campaign trail last year, Srettha and other candidates from the Pheu Thai party had pledged to fix Thailand’s economic ills. 

Part of his strategy in office has been to tout a digital wallet scheme, a program to provide a one-time cash handout of 10,000 baht (U.S. $275) each for Thai citizens who are hurting economically. But after many months of talk, the program has yet to take off. 

In addition, the prime minister has jetted across the globe to “sell” Thailand to world leaders and prospective investors.

Just days ago, Srettha was seen rubbing shoulders with French President Emmanuel Macron and Italian Prime Minister Giorgia Meloni, and attending the Italian Grand Prix of motor racing during an official trip to Europe. 

He did all this while trying to forge links between Thai businesses and the luxury fashion industry in Europe, as well as expanding bilateral cooperation in sectors including tourism, energy and electric vehicles. Srettha’s trip to Paris in mid-May was his second visit to the French capital in two months.

Another piece in the PM’s economic program is a flagship mega-project his government is promoting. The plan calls for constructing a land bridge across the Kra Isthmus, along with state-of-the-art sea ports at either end, that would offer international shippers a shortcut between the Gulf of Thailand and the Andaman Sea bypassing the Strait of Malacca.     

According to the prime minister, an Italian business group has expressed interest in that project.

During a meeting with the Formula One Group in Italy, the Thai leader expressed the wish that his country could one day host an F1 race, in line with his government’s vision to “place Thailand on the global radar for international events and activities,” the PM said May 19 in a social media post on X.

Hard facts

The next day, however, his government was dealt some lackluster economic news back home. 

On May 20, the National Economic and Social Development Board (NESDB) reported that Thailand’s economic growth stood at only 1.5% in the first quarter.

It said there were risks that the economy could stay sluggish for the rest of 2024 because of high household debt, non-performing loans, climate change that could affect agricultural output, and China’s slow economic growth. 

Srettha has pledged to increase Thailand’s Gross Domestic Product to 5% annually – it stood at 1.9% last year – but the country’s Central Bank, which reported that the economy had slowed down in March, has projected it will grow by 3% in 2025.

The NESDB, on the other hand, revised down its projections for GDP in 2024, from 2.2-3.2% to 2-3%.

Khon Kaen business owner Rakti is not alone among Thais in hesitating to expand his operations, according to the latest indicators gauging business sentiment in Southeast Asia’s second largest economy. 

Rakti said he wasn’t sure where Thailand was going. 

“In the short-term, I think everybody needs to see where we are heading so that everyone can have the confidence to spend and invest. Now it is not clear where that confidence can generate from.”

“We don’t know if the digital wallet will be in use by the end of the year and the land bridge is a far-flung dream. It is a long way to see who will actually benefit from it,” he said.

The central bank’s so-called Business Sentiment Index for April, which is measured by production, orders, investments, costs, net income and employment, was lower than the previous month. 

The sentiment index for Thai small-to-medium enterprises dipped in the first quarter due to unclear measures to boost the economy from the government, global and domestic sluggish growth and reduced spending power, Thailand’s SME Development Bank said in April.

Elsewhere, the manufacturing index fell for an 18th consecutive month partly due to the reduced production of cars, the Office of Industrial Economics reported. 

Domestic car sales dropped by nearly 25% in the first quarter, while exports were in the red for the first time in eight months, at 10.9%.

Tourism, however, picked up with more than 13.7 million foreign arrivals recorded between January and May 19, an increase of 39% year-on-year, the Economics Tourism and Sports Division said.

“Many business owners have stalled expansion because of uncertainties in both domestic policies and geopolitics,” said Piti Srisangnam, an economics lecturer at Chulalongkorn University.

“In the beginning, the government said the digital wallet scheme would be a strong cure for the Thai economy, but now that has yet to happen, everybody’s confidence and plans are held back.”

Another analyst said Srettha’s economic agenda was short-sighted and failed to address deeper problems.

“These projects do not address the structural problems of the Thai economy – low productivity and lack of quality growth,” said Pavida Pananond, a professor of international business strategy at the Thammasat Business School.

“Without sufficient improvement in key factors that could attract foreign investors, like skilled personnel or ease of doing business or fair competition, these short-term populist projects may prove too little and too late to turn around the Thai economy, which is in dire need of a more in-depth structural reform,” she told BenarNews.