Achi news desk-
Bangkok, Thailand – Sheltering from the sun on a street corner, Kridsada Ahjed recounts the day he was involved with the loan sharks who now account for most of his daily earnings.
“I went to the loan sharks because people like me – with no assets or savings – cannot qualify for help from legitimate banks,” Ahjed, a 40-year-old motorcycle taxi driver, told Al Jazeera.
“Now almost everything I make in a day goes towards paying the interest on my debt.”
Kridsada is far from alone.
Thailand’s household debt reached nearly 87 percent of gross domestic product last year, according to the Bank of Thailand, among the highest on earth.
It is estimated that almost $1.5bn of that debt consists of high interest informal loans.
Kridsada’s personal crisis is part of a wider malaise that has gripped the Thai economy
After decades of robust growth, Thailand is exhibiting all the hallmarks of the middle-income trap, analysts say, where a combination of low productivity and poor education leaves much of the workforce stuck in low-skill, low-wage work.
“Thailand is suffering not only from the slow return of demand from major export markets, but also from the changing nature of globalization which is hurting its competitiveness,” Pavida Pananond, professor of international business at Thammasat Business School, told Al Jazeera.
“International trade is increasingly driven by value-added services that require higher local skills and capabilities. This requires a systemic upgrade of the sophistication of the workforce and local companies beyond short-term handouts and investment incentives.”
While other Southeast Asian countries are bouncing back strongly from the economic shock of the COVID-19 pandemic, Thailand has failed.
Thailand’s economy grew just 1.9 percent last year, according to state economic planners, compared with growth of 5 percent or higher in the Philippines, Indonesia and Vietnam.
Even neighboring Malaysia, a much more developed economy with lower expectations for growth, registered an expansion of 3.7 percent.
Despite the recovery of Thailand’s key tourism sector, which accounts for around a fifth of the economy, its prospects do not look much better in 2024.
The World Bank said on Monday that it expects Thailand’s economy to grow by 2.8 percent this year, slightly better than Bangkok’s own estimates.
The Philippines, Indonesia, Vietnam and Malaysia are expected to see growth of between 4.3 and 5.8 percent.
The Prime Minister of Thailand, Srettha Thavisin, who took office in August after almost a decade of military rule, has declared that the economic situation is a “crisis”.
Srettha, a politician turned property mogul, proudly calls himself the “salesman” of Thailand.
Since taking power in a compromise with the royal establishment to block the Progressive Reform Party, the 62-year-old political neophyte has traveled the world in search of free trade deals and promoted the country as a base for global manufacturing supply chains.
But after years of Bangkok shying away from fundamental economic reforms, there are fears the economy could resist a quick fix.
Critics say Thailand’s military leaders have for years turned off global investors, become too dependent on China’s economic progress and squandered the potential of young Thais by neglecting to fund an education system capable of producing a workforce fit for the age. digital.
The World Bank said in a report released last month that two-thirds of Thailand’s youth and adults are “below basic reading literacy threshold levels”, while three-quarters have poor digital literacy skills.
Meanwhile, Thailand’s English language proficiency is among the lowest in the Association of Southeast Asian Nations (ASEAN).
To stimulate the economy, Srettha has proposed providing nearly all Thais over the age of 16 with a 10,000-baht ($280) cash slip — policy economists and political rivals have criticized as wasteful — expanding visa-free access to more of countries, and legalize casinos.
“He faces political risks from ‘doing’ and ‘not doing’ these measures,” Deputy leader of the Moving Forward Party, Sirikanya Tansakul, told Al Jazeera.
“With the big cash distribution plan, he faces legal risks from illegal government borrowing and coalition discontent. But if he cannot execute this biggest election campaign, he faces public distrust.”
Srettha has also embarked on an unusually public dispute with the Bank of Thailand, which he has urged to cut interest rates to spur growth.
The central bank has refused to lower the benchmark rate, currently set at 2.5 per cent, stressing the need to protect its independence.
In a stark assessment earlier this year, Pranee Sutthasri, a member of the central bank’s Monetary Policy Department, said the country had “severely lost its competitive edge”.
Sutthasri pointed to global forces – including China’s slowdown and the wars in Ukraine and the Middle East – as well as the kingdom’s failure to invest in training the population for the digital economy.
“It will continue to lag behind if Thailand, instead of making products related to artificial intelligence technology, continues to make downstream electronics products that people no longer want,” he told reporters late the month of January.
For Srettha, who was not the public’s first choice in the polls, a bad economy carries political risks.
“Political undercurrents that continue to meddle in domestic politics are red flags for investors,” said Pavida of Thammasat Business School.
“And now they have choices elsewhere without needing to wait until Thailand has sorted itself out.”
For many struggling Thais, the faltering economy brings more pressing practical concerns.
Hoo Saengbai, a 61-year-old lottery ticket seller in Bangkok, said her monthly income has more than halved to as little as $110 over the past few years as people cut back on unnecessary spending.
“I’m not so sure about this government or any government anymore,” he told Al Jazeera. “I’m just trying to put food on the table one day at a time. I eat if I win anything, I don’t eat if I don’t win. That’s all there is.”
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