Thailand’s economic policy must be flexible and adapt to changes

The Thai government should adopt policies and measures to adapt its economic management methods and directions to global changes and challenges, said Parnpree Bhahindra-nukara, a former deputy prime minister and foreign minister.

In his inaugural speech titled “The Direction of the Thai Economy” delivered on Thursday to mark the 27th anniversary of the National Press Council, he reiterated that Thai economic policy must be flexible and adapt to change.

Parnpree added that the global economy has remained unstable since the 2008 financial crisis and the impact of COVID-19 in 2020.

He noted that global trade and investment have not yet fully recovered after 2020, which was further deepened by the ongoing war between Ukraine and Russia and the Israeli-Palestinian conflict.

In addition, technological disruptions, global warming and geopolitical tensions have impacted global trade and investment, forcing companies to adjust their strategies and global supply chains due to the relocation of production bases.

Thailand relies on exports to generate over 70% of its GDP, with significant revenues coming from foreign direct investment (FDI).

However, global economic changes have led to challenges in exports and foreign investment, which were the main drivers of the Thai economy. This has resulted in the shifting of the manufacturing base outside of Thailand, according to Parnpree.

He said the domestic economy is grappling with a rise in public debt, which currently stands at 65.05%, which is constraining government spending.

Meanwhile, household debt is estimated to rise to 91.4% of GDP by the end of 2024, which will impact domestic consumption.

He further reiterated that political instability and frequent changes of government have disrupted the country’s development policy.

The Thai economy also faces external variables such as inflation, exchange rates, energy costs and international trade barriers that affect the competitiveness of Thai businesses.

Parnpree, a former sales representative, has several recommendations aimed at strengthening the future of the Thai economy.

He added that economic policy must respond to global economic changes.

For example, the Ukraine-Russia war led to shortages of products imported from these countries, which created an opportunity for Thailand to export substitutes.

Similarly, in the so-called chip war between China and the US, Thailand could attract investment in semiconductor or related industries to cope with changing geopolitical conditions and global supply chains.

However, he praised the country’s economic development vision, which is heading in the right direction, such as through the transition to the digital economy, Industry 4.0 and the expansion of the East Coast into the Eastern Economic Corridor (EEC).

But he warned that the policy lacks clear supporting measures and up-to-date regulations.

In the process of transitioning to a digital, green and clean economy, it is not possible to completely abandon old industries in favor of new ones.

There must be a systematic process of transforming old industries while promoting new ones.