Economic Malaise Grips Thailand Amidst Rising Household Debt

The streets of Thailand echo with the tales of financial distress as individuals like Kridsada Ahjed grapple with the consequences of spiralling debt incurred from informal loans. Ahjed’s plight is emblematic of a wider economic malaise gripping Thailand, marked by soaring household debt and structural challenges that undermine long-term growth prospects.

Thailand’s household debt, towering at nearly 87 percent of gross domestic product, represents one of the highest levels globally. The rise of high-interest informal loans, estimated at $1.5 billion, exacerbates the financial strain on individuals like Ahjed, highlighting the limited access to formal banking services for vulnerable segments of the population.

Behind the facade of Thailand’s economic facade lies a deeper crisis characterised by stagnating productivity and a workforce ensnared in low-paid, low-skilled occupations. Despite decades of robust growth, Thailand finds itself ensnared in the middle-income trap, hindered by structural deficiencies in education and productivity.

Pavida Pananond, a professor of international business at Thammasat Business School, underscores the imperative for systemic upgrades to address Thailand’s economic challenges. She emphasises the changing dynamics of globalisation, emphasising the need for enhanced skills and capabilities to drive sustainable growth in the digital era.

While neighbouring Southeast Asian countries rebound vigorously from the pandemic-induced economic shock, Thailand languishes behind. With a modest growth rate of 1.9 percent last year, the kingdom trails its regional counterparts significantly, signalling broader systemic issues hindering economic recovery.

Thailand’s tourism sector, a cornerstone of its economy, remains a shadow of its former self despite signs of revival. The World Bank’s modest growth forecast of 2.8 percent for 2024 underscores the subdued outlook for Thailand’s economy, casting doubts on its ability to regain momentum amidst stiff regional competition.

Prime Minister Srettha Thavisin, acknowledging the gravity of the economic situation, has pledged to rejuvenate Thailand’s economy through a mix of policy measures. However, critics remain skeptical, citing years of neglect in addressing fundamental economic reforms and investing in human capital development.

Thailand’s education system, characterised by poor literacy and digital skills, reflects a broader failure to equip the workforce for the demands of the digital economy. With two-thirds of Thai youth lacking foundational reading literacy and inadequate digital literacy skills, the kingdom lags behind its regional peers in preparing for the digital age.

Srettha’s proposed stimulus measures, including cash handouts and the legalisation of casinos, face criticism for their efficacy and sustainability. The government’s insistence on monetary easing to spur growth has sparked tensions with the central bank, highlighting broader challenges in coordinating fiscal and monetary policies.

As Thailand grapples with economic headwinds, the implications extend beyond the realm of policy debates to the daily struggles of individuals like Hoo Saengbai, a lottery ticket vendor in Bangkok. For Saengbai and countless others, the economic downturn translates into tangible hardships, underscoring the urgency for comprehensive reforms to revitalise Thailand’s economy and alleviate the plight of its citizens.