Move Forward’s Sirikanya Tansakul points to a sharp rise in consumption even with lower economic growth. The key problem is not private consumption or a need to boost stimulus but a world downturn and reduced demand for Thailand’s exports.
Thailand’s economy is on track to grow by only 2.5% in 2023 as shock news emerged on Monday from the state’s economics agency that the economy grew by 1.5% in the third quarter. The news prompted a mixed response from politicians with Prime Minister Srettha Thavisin telling reporters he was ‘worried’ by the figures while Move Forward’s Economic spokesperson Sirikanya Tansakul questioned a claim by an advisor to the PM that Thailand was in an ‘economic crisis’ requiring emergency measures.
Prime Minister Srettha Thavisin, on Monday, admitted he was ‘very worried’ about figures released by the National Economic and Social Development Council (NESDC) which show that the Thai economy grew by only 1.5% in the third quarter of the year, a figure which had widely been projected to be 2.4% in a Reuters poll of analysts.
The third quarter’s growth is below the 1.8% recorded in the second quarter and the 2.6% growth in the first quarter of 2023.
Economic agency now says annual growth for 2023 will only be 2.5% after third-quarter only managed a 1.5% GDP gain versus analysts’ projection of 2.4%
The figure released by the council’s Secretary-general Mr Danucha Pichayanan means that the full-year GDP projection for Thailand in 2023 is now likely to be one of only 2.5% growth, a figure which would be lower than last year at 2.6% and which is still dependent on robust foreign tourism numbers and earnings in the next 40 days or so.
Commenting on the announcement by the economic agency which is tasked by the government to monitor the economy, Prime Minister Srettha refused to engage with reporters concerning the controversial Digital Wallet proposal, which, on Sunday, was touted by his Secretary General and top economic advisor Dr Prommin Lertsuridej as essential to the economy at this time because Thailand was facing what he termed an ‘economic crisis’ that required emergency stimulus measures.
On Monday, Prime Minister Srettha would only say that he had asked the National Economic and Social Development Council (NESDC), boss, to look at the figures that have just been released and that his government would now be trying to bolster economic growth for the fourth quarter.
Prime Minister remains silent on controversy swirling around the Digital Wallet proposal with opposition to the measure becoming a distraction
Furthermore, Mr Srettha said it would be unhelpful for him now to comment on the Digital Wallet controversy or the argument that was raging around the measure as such discussions were counterproductive.
At the present time, a proposal on the scheme, including funding through a bill before the House of Representatives for ฿500 billion, is to be considered by the Council of State to see if the measure is legally sound.
Some political pundits are strongly advising the PM to abandon the project due to the distraction it is causing to the government and the political danger it poses to what is still a fragile coalition.
He told reporters that it was too early to think about the implications of the disappointing economic data for the first quarter of next year until this year is fully completed.
In view of the latest economic news, he was clear: ‘I admit that I am very worried.’
Move Forward Economics spokesperson denies that the country is in the midst of an economic crisis at all and calls for a calmer response and appraisal
The downturn in the country’s economic performance was taken up by the Deputy Leader of the Move Forward Party, Ms Sirikanya Tansakul, who is also the economics spokesperson for the opposition.
Ms Sirikanya criticised the government for declaring an economic crisis at this point and questioned whether it existed at all.
The Move Forward Party spokesperson said it was extraordinary to see a government creating a sense of crisis linked with the country’s economy.
The 42-year-old House of Representatives star performer, who has a background in economic research and a Master’s Degree in the subject, agreed that the economic performance from July to September 2023 was disappointing.
However, she said it would be wrong to declare it a crisis.
At this point, she noted that the reason for the lower-than-expected growth was a decline in the country’s industrial sector.
Thailand’s economy is responding to a weakened world economy and trade environment which is also linked to a crisis of confidence among investors
Several commercial bodies in recent times have reported a decline in the country’s manufacturing index and most recently a drop, reported in October, in the country’s investor index despite a bounce when the new government was formed in September, ending a period of political instability.
Sharp fall in Investor Confidence Index (ICI) recorded in October as external world outlook turns darker and the economy falters with capital outflows
Looking at the figures, Ms Sirikanya highlighted a 4% drop in industrial output linked to the failure of the country to export enough hard drives and electronic circuit boards.
This is compared to growth in the tourism sector where restaurants have seen a 14.9% pick up in business with the wholesale trade up by 3.3% and transportation up by 6.8%.
Private consumption and foreign tourism sectors up but demand for Thailand’s exports including from China and slowing Western economies has fallen
Overall, Mr Sirikanya highlighted that the private sector had shown 8.1% growth and while private investment was disappointing, it still had increased by 3.1%.
What was notable about the third quarter data was a drop in the stock of goods held by firms suggesting a continued decrease in production within the country’s vital industrial sector.
Srettha outlines Digital Wallet as his government begins to flounder with a faltering economy and confusion
Economic analysts have pointed out that up to this year, 60% of Thailand’s economy has been driven by the country’s industrial sector and exports, which have suffered enormously from the perfect storm of developments, not least being a significant and as yet under-reported downturn in the Chinese economy, as well as a reduction in demand from Western economies due to a slowdown caused by rising interest rates.
The country’s exports were down 3.1% in the three months to the end of September while they are projected to be down by at least 2% for the year.
Rising interest rates, falling order books, lower stock all show a depressed manufacturing base while increased consumption shows no need for stimulus
The rise of interest rates even in Thailand where they are still only half the world norm at 2.5% is adversely affecting Thai companies that have large outstanding debt and working capital requirements.
Ms Sirikanya highlighted that Thailand’s service sector in the last quarter had grown by 23% but again she noted that imports were markedly down by 10.2%, again emphasising a slowdown in manufacturing output.
However, she noted a 4.9% drop in government spending and reduced public sector investment caused by the delay in forming a government after the May 14th General Election.
At length, she said the figures show Thailand’s economic performance responding to a slowdown in the world economy, but this could not be represented by the government as an economic crisis.
Indeed, she questioned the basis for ministers declaring the need for economic stimulus when the private consumption sector in the last three months up to the end of September had already grown by 8%.
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Further reading:
Incoherent government economic policy clashes with Bank of Thailand’s efforts to rein in debt
Economy is in troubled waters with fears for both exports and foreign tourism as 2023 winds down
Thailand faces an economic future of low growth despite Srettha’s plans because of a darker world
Another dip for the baht or are economic danger signals flashing for both Thailand and the world?
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