Bank of Thailand: 'Economic recovery will take a long time and more social inequality'
Bank of Thailand's forecasts for the Thai economy are gloomy. Governor Sethaput says it will take at least two years for the economy to recover. The main concern is the social inequality in Thailand.
Sethaput argues that predictions about the consequences of Covid-19 have changed, so that there is a need for new measures and policies to limit the economic downturn. In the initial phase of the corona crisis, the idea was that the consequences would be serious, but that the situation that had arisen would not last very long. As a result, economic measures focused on more measures, including cash injections and conditions to postpone debt payments.
Now that the crisis is protracted, more customization is needed, with an emphasis on debt restructuring. The governor warns that economic recovery also has a price.
“Even when the economy has fully recovered, not everything will be the same as before the crisis. There is a good chance that inequality in the country will increase. The pandemic is having a huge impact on businesses, especially in the tourism sector. The crisis has resulted in high unemployment, which means that household debt will skyrocket. Small and medium-sized businesses are also suffering. Only the big companies can survive more easily thanks to their financial strength.”
Source: Bangkok Post
As long as the borders remain closed to tourists, there will be no further progress in the recovery, but rather this than another lock down.
Life is not fair and with that in mind I would like to mention that people who pay income tax in Thailand have the option of a tax deduction of 30.000 baht for purchases until the end of this year.
https://www.thailand-business-news.com/economics/81200-thailand-approves-30k-baht-tax-deduction-to-stimulate-domestic-spending.html
Amazing Thailand and I love it 🙂
Economically, things are not going well in many countries and Thailand's economy is largely dependent on exports. If things are not going well abroad, in addition to the disappearance of tourism, things are going less well than before in the Thai business community. Then you can start spending gifts such as no tax on 30.000, but then you are talking about saving a few thousand baht at the most, but an expense of 30.000, and if the prospects are not good in many industries, then it seems to me that it would be better for the consumer not to large spending on luxuries and unnecessary to do. I wonder how much tax revenue will have fallen back in 2020 due to the sharply contracted economy and then a 30.000 baht measure will help bring it down as well. It is better to give money in the form of benefits to those with no money because that stimulates the economy more and better because a larger group of money recipients and companies then benefits.
Government debts are rising, the economy has contracted sharply, exports have declined. tourism wiped out, income disparities that were among the highest in the world increased, millions of unemployed and people who have to bite a stick for about 100 baht a day. Previously already 14 million Thais with a poor card, and now there are millions of unemployed and millions whose income is uncertain or has fallen to only a few bahts a day. Now Johnny can find this amazing and place a smiley, but this seems to me to be appropriate because the situation is bad for millions if not more than 20 million Thais.
I understand what you mean, but are we going to be more Catholic than the Pope? Inequality is why you have it better…
Inequality comes from the exploitation of others as well as lack of participation. If all players have something to say, you can reduce the risk and extent to which one person uses others for their own gain. Not that inequality can be completely combated, but by acting together (in addition to participation, think of transparency and accountability) we can set up a network/system in which at least the excesses are combated.
For Thailand specifically, I recommend reading “Unequal Thailand: Aspects of Income, Wealth, and Power.” Written by Pasuk Phongpaichit and Chris Baker. I certainly cannot put a smile on my face when I know how great the inequality is and how unnecessary it is. Something can easily be done about that, then my plate of food in Thailand may only cost a little more.
It all sounds very nice, good ideas too, but it is carrying water to the sea.
All these systems have also been used in other countries over the years and what have they achieved? NADA, simply because what one government creates is destroyed by the next government.
If the population cannot break free from a certain way of thinking and acting nothing will happen, only when the water is up to the lips.
Canceling all debts, reset?, can produce something good provided one does not fall back into old systems and habits.
And there may be a lot of profit to be made there!?
And this may be true worldwide.
Canceling debts without governments demanding anything in return!
Most Thai people's income is so low, especially now, that they don't pay taxes. So the tax deduction only benefits the rich. Most members of the government will definitely enjoy this 🙂
Most Thai's income is not that low at all.
You should also take into account the cost of living in Thailand. Most things are a lot cheaper than in the West.
Thais with a more or less mediocre education don't earn bad at all.
https://adecco.co.th/salary-guide
No, Fred,
Most things you buy in the West are just as expensive in Thailand!!
Moreover, there are few Thais with a mediocre education.
So the income of the average Thai is damn low !! And now, in the Covid-19 period, that income is weakening even further.
Explain to me how you arrived at that statement.
I think you are talking about 10% of the population, officially the minimum wage is now 330 bht per day. And I know that for example in the isaan many will still work for 5000 to 6000 bht per month. This certainly won't get better now with a mass of job seekers. I know the cost of living in Thailand very well, my wife is Thai and I can guarantee you that 9000 bht a month will not allow you to live but you will survive. That is the harsh reality, Thailand is more than Bangkok where wages are indeed a lot higher, but also the cost of living is a lot higher.
There is no general official minimum wage 330 Baht.
The minimum wage is fixed per province
Some examples
– Bangkok is 331 Baht
– Chiang Mai 325 Baht
– Kon Kaen 325 Baht
– Buriram 320 Baht
– Kanchanaburi 320 Baht
– Chiang Rai 315 Baht
https://www.mol.go.th/en/minimum-wage/
Whether that is respected everywhere is another thing.
But it is also not the case that everyone works or has to work for that minimum wage and that they are not allowed to earn more. (Some "farangs" sometimes assume that the latter is the case in particular)
Of course you can earn more, but if you tell your boss that you want to earn more, he will exchange you for a new power that does not ask for a raise.
A very large part of the Thai workforce consists of day laborers.
If there is no work for a day, that also means no money for a day.
The gas station nearby only hires young people and pays them 6.000 Baht per month.
What is not clear as I write
“Whether that is respected everywhere is another thing.”
Fred
You say: 'Thais with a more or less mediocre education don't earn bad at all'. This may be the case according to the salary guide, but the practice is different.
My partner has a high level of education and has a good job. According to the salary guide, my partner should earn 13,000 Thai baht more than now.
And there are so many!
What one should earn and what one actually earns are not the same thing. No one dares to raise this for fear of being fired. This is reality Fred.
Goodbye,
Dear people, you almost forget the main thing and that is that the baht is much too high and we all know why that is and that makes Thailand too expensive for export because exports were already falling a lot because of that and for the covid. And don't forget the inhumanly high household debt already in the 80 pr and still rising. And as long as the old days stay in power not much will change VERY SAD for these lovely people
The trade-off between corona measures and the economic consequences is difficult. I experienced the situation in Thailand until the beginning of July and then in the Netherlands. Strict measures and enforcement in Thailand, in the Netherlands especially advice that was ignored by many people. The consequence in Thailand is well under control of corona and in the Netherlands again a mess with many sick and dead. Almost all the people I speak to think that the government in the Netherlands falls short.
The economic consequences of corona measures are serious, as are the consequences of insufficient intervention. Those who know may say so, but too one-sided statements are not useful in my opinion.
Here in Phuket, only the small entrepreneurs who deal with the tourists are victims of the covid.
But those who have nothing to do with it still fill their pockets.
As long as people ask for 15000 bath and travel and expenses per day, I have no pity for anyone.
If I see and hear what the staff here asks, then I can stay that way for another year.
Until they are back on their feet again.
Gr Rob
What do you mean by 15.000 baht a day?
Robert, interesting post.
Can you clarify this a bit?
Goodbye,
For the first time in history, we have an economic crisis on three levels at the same time:
– in consumption expenditure (households are spending less for various reasons)
– in manufacturing and logistics (less production and less transport due to all kinds of lockdowns and other restrictive measures)
– financing (debts not paid off, more debts are shifted to the future; governments have to bail out businesses).
A more or less complete solution, read recovery of the economy, must be determined country by country and requires measures in these three areas simultaneously.
@Rob,
You are certainly right, but don't forget the unwillingness of buyers and especially foreign buyers. I really like making money but still I urge some suppliers (farmers) to ask for higher prices and then I will tell you the reason why a fair price is better for everyone.
About 10 years ago we were working with organic vegetables, but many Dutch traders were not willing to pay an extra 20 euro cents per kg and if that willingness is not there, then it stops as far as I'm concerned.
I now see the same thing happening with CO2 emissions compensation. A ton of emissions costs around 5,50 euros and again there are noises why a customer should pay. It's all a penny work what it should cost to deal more economically with the planet, and yet there is great resistance.
Wealthier foreign buyers can make a difference, but all too often fail to do so. It would not be out of place to promote with awareness of the effect of a purchase.
Chicken kilo bangers from Thailand, KFC, cheap clothes... everyone thinks it's not possible, but not much changes. The responsibility for change lies more with the foreign buyers than with those few elite families.
And all this for a virus with a mortality rate slightly higher than the regular flu.
Curious what will happen if a killer virus really starts to spread…
The side effects of corona are greater in most countries than the impact of the virus itself!