Bangkok: The Thai economy remains uncertain in the second half of the year, despite government efforts to stimulate the economy. Dr. Bundit Nijthavorn, former Deputy Governor of the Bank of Thailand, believes that negative external factors and internal structural weaknesses are leading Thailand into a period requiring extreme caution.
According to Thai News Agency, the world faces a "three highs" scenario, a warning sign of recession. An assessment by the OECD suggests that the global economy is likely to slow down significantly in the second half of the year, with a risk of a worldwide recession. The main cause is the prolonged conflict in the Middle East, resulting in high oil prices due to uncertainty in production sources and supply chain issues, high inflation as a consequence of soaring energy costs, and high interest rates used to control inflation. These conditions are pushing the global economy into stagflation, characterized by economic slowdown but high inflation.
For Thailand, Dr. Bundit warns to watch out for "twin deficits," which refers to a fiscal deficit coupled with a widening current account deficit. This situation could directly impact the weakening of the Thai baht and lead to capital outflow. Public confidence is also shaky, with surveys indicating that 71% of Thai consumers believe the economy is in a bad state, and over 56% believe the country is heading in the wrong direction. This reflects the fading hopes after the election amidst rising living costs and political uncertainty.
Dr. Bundit cited Indonesia as a case study, where the country lost investor confidence and its currency plummeted due to excessive populist policies and a lack of fiscal discipline. In Thailand, economic stimulus programs like "Thai Help Thai Plus" or various cash handout measures are seen as merely temporary boosts. Once the funds run out in the last quarter of the year, fundamental problems will return. Massive borrowing for spending without focusing on truly vulnerable groups could lead to foreign investors selling off assets.
Dr. Bundit recommends adaptation strategies for SMEs and the public, such as maintaining financial discipline by saving and cutting unnecessary expenses, maintaining liquidity by nurturing relationships with financial institutions, and not becoming complacent with government measures, viewing them only as a short-term lifeline.
In summary, the Thai economy in the second half of the year is not just about waiting for government stimulus, but a test of its resilience. If the government continues to overspend and fails to accelerate structural reforms, Thailand may fall into a cycle of currency depreciation, soaring inflation, and an irreversible economic recession in the future.