Bangkok: The Thai economy is not on the brink of collapse, despite popular concerns about excessive debt, said Associate Professor Dr. Thanawat Phonwichai, President of the University of the Thai Chamber of Commerce.
According to Thai News Agency, Dr. Thanawat emphasized the importance of relying on data and facts for economic analysis rather than emotions, as he addressed the misconceptions surrounding Thailand's financial situation.
Dr. Thanawat acknowledged the presence of excessive debt among certain groups, noting that the non-performing loan (NPL) situation remains high and could potentially increase in areas such as home loans, credit cards, and car loans. However, he argued that these concerns do not reflect the overall health of the nation's economy. Thailand's public debt stands at approximately 65% of GDP, well below the 70% threshold and significantly lower than that of developed countries like the United States and Japan.
Furthermore, while Thailand's household debt to GDP ratio is high at 86%, it is on a downward trend and not at a crisis level. The country also does not face a financial institution crisis, as GDP continues to grow at about 2% and average NPL levels remain under 5%. This is a stark contrast to the Tom Yum Kung crisis, where NPLs soared to 47%.
Income growth concerns persist, with about 25% of the population spending more than they earn. However, surveys by the University of the Thai Chamber of Commerce and data from the National Statistical Office show that most individuals have incomes that meet or exceed their expenses, and the nation's current account surplus indicates positive net savings.
Dr. Thanawat also highlighted improvements in income inequality, with the Gini Coefficient decreasing and the proportion of low-income individuals dropping significantly over the decades. Despite these positive indicators, the primary issue facing the Thai economy is its low growth rate.
Thailand's growth has slowed considerably from previous highs of 12% to an average of 1-2% post-2005 political upheavals and the Covid-19 pandemic. This underwhelming growth is notably less than that of neighboring countries, impacting Thailand's attractiveness to foreign investors and contributing to its aging society and labor shortages.
Looking forward, the International Monetary Fund forecasts Thai economic growth below 2.5% over the next five years, far short of the national strategy target of 5%. Dr. Thanawat advocates for long-term economic solutions beginning at the individual level, urging adaptation and the adoption of the King's Science, which focuses on sufficiency and moderation.
He cited successful examples, such as the "Rice field 1 rai, get 100,000 baht" project, demonstrating the potential for increased productivity through education and knowledge. Dr. Thanawat concluded by stressing the importance of following the King's philosophy for achieving success and alleviating debt, encouraging those facing financial burdens to maintain discipline and knowledge to improve their circumstances.