Business leaders warn of economic turmoil as Thai ministers meet without the PM amid concerns over political instability and a Chinese import surge. Fears of GDP growth below 2% in 2024 are rising, with unemployment up and consumer confidence at an 11-month low.
As Thai ministers huddled together on Sunday to discuss the government’s agenda and Wednesday’s Constitutional Court decision on Prime Minister Srettha Thavisin’s tenure in office, it was against a backdrop of an economy that is already struggling. This comes despite attempts by government spokespeople to talk it up. In short, business leaders are warning that the country’s manufacturing sector cannot withstand a Chinese tide of cheap products. Meanwhile, consumer confidence is slipping, and unemployment is rising. A Federation of Thai Industries (FTI) survey has shown that most Thai business executives fear that the economy will not grow even 2% this year.
On Sunday, government ministers, except Prime Minister Srettha Thavisin, were at Government House reviewing ongoing work. The meeting of coalition partners was hosted by the Minister of Commerce and Deputy Prime Minister Phumtham Wechayachai.
The government whip was coy about discussing the future of the prime minister ahead of Wednesday’s Constitutional Court decision. In short, he played down the significance of the gathering.
Ministers meet at Government House to discuss ongoing work and Prime Minister Srettha’s uncertain future
“It is just a normal discussion. We discuss the government’s work, problems, and obstacles so we can find solutions.
It is also about reviewing parliament’s agenda and cabinet’s work,” he told reporters. However, it has been confirmed that discussions do include what may happen if the PM is removed.
Furthermore, there are talks on the nature of a future cabinet reshuffle. For instance, there is still an outstanding cabinet seat to be filled by the United Thai Nation (Ruam Thai Sang Chart) Party.
The talks come hours after government spokesman Chai Wacharonke issued an upbeat bulletin on foreign tourism. It suggested that incoming foreign tourism numbers are again buoyant.
Government predicts rising foreign tourism numbers as ministers discuss another potential cabinet reshuffle
In short, the bulletin projected 37.97 million foreign tourists in 2024. The spend is projected at ฿1.77 trillion or ฿46,615 per tourist.
The outlook according to the report is that numbers will be up 34.88% with income rising by 44.2%. Nonetheless, the figures are still below what was recorded in 2019.
In short, the news report appears to be an effort by the government to talk up a foundering economy. Despite this, the government appears uncertain in terms of direction. In addition, the country is now buffeted by political instability.
Certainly, confidence has already been shaken by the dissolution of the country’s largest political party. In addition, the economy is now facing the real danger of the removal of Prime Minister Srettha Thavisin.
On Wednesday, a judgement in a case brought against the prime minister for the appointment of a cabinet minister who did not meet ethical standards is due.
Certainly, for the last week, government supporters and a range of spokespeople have downplayed the danger.
The problem is that the removal of Prime Minister Srettha would collapse the present government. After that, Thailand would be facing at least four months of political turmoil before a new prime minister or cabinet is put in place.
Thailand’s economy faces real uncertainty amid the Prime Minister’s potential removal and political turmoil
Undoubtedly, the removal of Mr. Srettha would be a blow to confidence in Thailand and claims that the country is politically stable.
Nonetheless, according to a bullish Mr. Chai on Saturday, the Thai economy is expected to grow by over 3% in 2024. The problem is that this is not what the raw economic data is saying.
Nor is it what business leaders are reporting on the ground.
Moreover, it is certainly not what the public thinks. Consumer confidence, for instance, hit an 11-month low in July. According to the University of the Thai Chamber of Commerce (UTCC) President Thanavath Phonvichai, the reason is political instability.
Economists question government’s growth projections as Consumer Confidence hits an 11-month low in July
On Saturday, the toll of these developments was brought home by the Employers’ Confederation of Thai Trade and Industry (EconThai).
In brief, it reported that unemployment in Thailand is rising.
At this time it stands at 2%. The body dismisses Thai government officials’ figures at 0.9%. In short, that includes anyone working casually who has had just an hour of work a week.
The 2% figure relates to Section 33 workers employed under the Social Security Act. In short, this includes blue-collar workers and tax-paying Burmese, Cambodian, and Laotian workers.
The body says somewhere between 37-38 million Thai workers are registered under the act.
Rising unemployment in Thailand linked to continuous factory closures and economic slowdown in key sectors
The rise in the unemployment figure was highlighted by the Employers’ Confederation of Thai Trade and Industry (EconThai)’s Vice Chairman Tanit Sorat.
He did not mince his words.
“The Thai economy is slowing down. The government’s economic stimulus measures have still not helped the economy, while its budget has yet to support the local economy because of the slow process of budget spending,” he explained on Friday.
Significantly, the unemployment rate is rising due to both factory closures and existing concerns scaling back in order to survive.
Mr. Tanit’s warning came just after the influential Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) called on the government to act.
Thailand finds itself facing economic and political turmoil. Top economist warns of trouble ahead
Either way, Thailand faces political upheaval after the August 14th court decision on the PM’s future
Alternatively, a lot more Thai firms, predominantly SME-type concerns but also large undertakings, are likely to fail.
Thai business leaders urge government action as unemployment rises and economy continues to struggle
Meanwhile, Thanavath Phonvichai, President of the University of the Thai Chamber of Commerce (UTCC), said the consumer confidence index fell from 58.9 to 57.7 in July. Basically, it is the lowest reading since September 2023.
Notably, this came before last week’s dissolution of the Move Forward Party, which has damaged confidence in Thailand’s democratic credentials abroad.
Both the European Union and the US State Department criticised the decision. In particular, the European Union described it as a setback for political pluralism in the country.
There is also unease among the Thai public about ongoing political challenges under the 2017 Constitution. Mr. Thanavath warned that Thai public confidence is very susceptible to political instability.
He estimated that it may impede growth by 0.3% this year. In summary, this could push Thailand’s GDP growth back towards 2% or even lower. “People are worried that Thai politics may lack stability in the future.
The dissolution of the Move Forward Party is not expected to significantly impact the economic system. However, if a political accident occurs requiring a change in Prime Minister, it could create a political vacuum for about 4 months, affecting the country’s overall economic management.
This could potentially reduce Thailand’s economic growth by 0.3% this year, with the whole year possibly expanding by only 2%,” Mr. Thanavath outlined.
Significantly, he predicted that the unseating of Prime Minister Srettha Thavisin would be far more damaging if it happens.
Political instability can significantly impact Thailand’s GDP growth and overall economic management
At the same time, economists are awaiting the second quarter’s GDP data for the economy. Thai GDP officially grew by 1.5% in the first quarter.
However, most analysts see output in the second quarter up only 1%.
Indeed, there is rising scepticism and concern about the kingdom’s economic outlook. A Federation of Thai Industries (FTI) poll this week showed that 51.7% of senior management executives felt that Thai GDP growth for 2024 would be less than 2%.
Simultaneously, 39.9% pegged it at 2-3%, 5.6% at 3-4%, while a very optimistic 2.8% saw growth over 4%.
Notably also, while 39.8% saw business staying the same in the second half of 2024, 32.2% saw the situation deteriorating. Only 28.8% saw the second half bringing improvement in the economy.
Business leaders sceptical about Thailand’s economic outlook amid rising worries. Notably, a Chinese invasion
In addition, business leaders are complaining that the government’s disbursement of the budget so far this year is still slow. Then there is the ongoing collapse of Thailand’s manufacturing sector.
Thailand is facing not only a tsunami of cheap Chinese products being dumped on its markets but furthermore, an invasion displacing Thai business concerns.
Last week, Land Transport Federation of Thailand (LTFT) chairman Thongyoo Kongkhan called on the government to help the Thai trucking industry. It followed news that over 10,000 Chinese trucks are already registered here.
In addition, this is presently expected to grow by 100% annually according to the industry. Undoubtedly. a massive transformation or economic invasion is underway. Furthermore, the Department of Land Transport (DLT) has confirmed the claims made by Mr. Thongyoo.
It cited Section 24 of the 1979 Land Transport Act and said that 8,473 trucks linked with Chinese concerns are legally registered in Thailand.
Thailand’s manufacturing base declines as Chinese imports and firms expand aggressively within its borders
This is happening with Chinese firms establishing bases and logistics infrastructure in Thailand.
In short, they are taking advantage of the Regional Comprehensive Economic Partnership (RCEP) and the ASEAN-China Free Trade Area (ACFTA) to expand into the Thai market.
In the meantime, this week, the Ministry of Commerce activated a range of data agencies to launch a monitoring campaign to enforce Thailand’s quality standards. However, this is almost certainly not going to stem the tide.
Significantly, government statements have consistently mentioned World Trade Organization (WTO) rules. In addition, Thai ministries in recent weeks have been summoned by representatives of the Chinese Embassy anxious to discuss cross-border trade.
In short, Thailand appears not to be willing to take the same route as Indonesia, which has imposed 200% tariffs on Chinese made garment imports.
However, before this, nearly fifty thousand Indonesian workers had already lost their jobs in just that sector alone.
Join the Thai News forum, follow Thai Examiner on Facebook here
Receive all our stories as they come out on Telegram here
Follow Thai Examiner here
Further reading:
Thailand finds itself facing economic and political turmoil. Top economist warns of trouble ahead
Inward immigration may ultimately be the only thing that can halt Thailand’s fated economic decline
Thailand’s days of GDP growth in excess of 5% may be a thing of the past as it has grown too old
Cabinet in pension move as the number of working Thais to over 60s is set to half in 20 years
Thailand’s new move to boost the birth rate and fight the negative impact of an ageing population
Denmark and Thailand seek economic partnership and face the same challenge – demographics
Thailand’s new move to boost the birth rate and fight the negative impact of an ageing population
BCG economic and social blueprint over the next 5 years unveiled, promises more money for less
Noble spirit of Thailand’s elderly helps country deal with demographic problem
