Thailand's economy sends positive signals, new Prime Minister Shinawatra still faces a series of challenges

Thailand is struggling to revive its economy as higher operating costs hit small and medium-sized businesses.

New Thai Prime Minister Paetongtarn Shinawatra. (Source: Bangkok Post).

The Thailand Industrial Sentiment Index (TISI) rose for the first time in four months to 89.3 in July 2024, boosted by increased demand for food, medicine and cosmetics, the Federation of Thai Industries (FTI) said.

This improvement comes after the TISI index in June 2024 was at 87.2 points, the lowest level in 24 months.

With more orders for food, medicine and cosmetics, and the government speeding up budget disbursements, many businesses seem to be more confident, according to FTI Chairman Kriengkrai Thiennukul. Increased budget spending, especially on state infrastructure development projects, has injected capital into the economy, bringing significant benefits to the construction industry.

Mr. Kriengkrai added that the number of applications for state investment incentives increased by 35% compared to the same period last year, reaching more than 458 billion baht ($13.22 billion). All these factors contributed to the higher TISI index in July 2024, but that does not mean that businesses can be complacent about the country's economic situation.

Thailand is still struggling with high household debt levels, causing banks to tighten auto loan criteria, affecting the auto industry.

According to FTI, domestic car sales in the first half of this year fell 24.1% compared to the same period last year. The country's household debt-to-gross domestic product (GDP) ratio is now 91%.

TISI data for July 2024 is based on a survey of 1,323 businesses in 46 industries under the FTI. Accordingly, the global economy tops the list of concerns of businesses with 66.8%, followed by domestic political situation (58.7%) and exchange rate fluctuations (37.9%).

The survey was conducted ahead of the August 14 ruling by Thailand's Constitutional Court to remove Prime Minister Srettha Thavisin from office for violating ethical standards.

On August 16, the Thai House of Representatives voted to elect Ms. Paetongtarn Shinawatra (youngest daughter of former Prime Minister Thaksin Shinawatra) as Prime Minister, replacing her predecessor Srettha Thavisin. Ms. Paetongtarn became the youngest Prime Minister in Thai history and one of the biggest challenges she has to face is to revive the country's economy.

Economist Vorapol Sokatiyanurak, former secretary of the Securities and Exchange Commission of Thailand, praised the 37-year-old new prime minister. However, he said that Ms. Paetongtarn will face significant challenges, especially in economic issues and job creation.

"Prime Minister Paetongtarn will have to address the declining competitiveness. The lack of high-quality human resources, especially in the fields of science and technology, is preventing Thailand from producing the goods that the modern world demands," Mr. Vorapol commented.

On the other hand, household debt is another pressing issue that the new prime minister must address, according to Mr. Vorapol. Household debt in Thailand currently exceeds 16.3 billion baht.

Ms. Paetongtarn comes from the private sector. Her company is involved in real estate, hotels and tourism. The stock market reacted positively to the news that Ms. Paetongtarn was elected as Thailand's 31st prime minister. Investors are hopeful that many of the current economic policies will continue.

Source: https://baoquocte.vn/kinh-te-thai-lan-phat-di-tin-hieu-tich-cuc-tan-thu-tuong-shinawatra-van-doi-mat-hang-loat-thach-thuc-282921.html