Thailand’s economy is struggling – it’s not a secret. Household debt is on the rise, a drought has caused crops to suffer and the country has an abundance of rice stores that are likely to go bad before they can be sold off. The rubber market is also struggling causing issues to worsen even further.
When the World Bank released their economic growth predictions for 2016, a modest growth of 2.9% in the world’s GDP was expected.
But China’s struggling economy hurts Asean members dramatically. The country is slumping and each new report shows that there are vital problems underlying China’s slump that will take years to fix. Economic forecasts for emerging markets are taking direct hits from China, and Thailand’s growth is expected to contract from 2.5% GDP growth in 2015 to just 2.0% growth in 2016.
High household debt is strangling Thailand’s economy and has reduced domestic consumption. The country’s GDP will contract by as much as 20% in 2016 causing further strain to the military rule that once seemed a promising turn for the country.
Manufacturing in the country weakened in January, exports slumped for the 13th straight month and the drought worsened. A new rice scheme was introduced as stock piles continue to grow and rubber famers are having their product purchased by the government to offset economic hardships in the industry.
The baht hit its lowest level in almost a decade in January while at the end of the year bank profits started to fade away.
It’s gloomy times for one of Asean’s most dominant forces in the past ten years. Issues in the country are stemming over from previous rule, and Thailand’s junta may be unable to help propel the country forward. Economists believe that the country is on a downward spiral, and it will get a lot worse before it gets any better for Thailand.
Private investment in Thailand may dwindle during the year making unrest even more evident. Policies in the country are uncertain. The lack of the political structure in Thailand is the main roadblock.
Thais are in a perpetual “wait-and-see” environment wherein they have little to no options but to wait for policies to be made to strengthen the economy. Many economists believe that policy measures will come together within a year, but lack of a clear political schedule is harming the country almost as much as the uncertainty in China’s economy.
Progress is being made in Thailand’s Internet and mobile markets with recent 4G auctions that may spur the economy forward. Thailand may move into the digital age this year with further advancements. It’s possible that Thailand’s tech sector will become a dominating force in the coming years with advancing Internet speeds and reliability.