Thailand's economy in Q2 is facing its worst crisis in two decades, deeply affecting consumer purchasing power and significantly impacting the industrial sector. Current production capacity is estimated at around 52.84%. With the ongoing political crisis outside of parliament, can the government manage these challenges?

In 2020, amidst what can be described as a severe economic crisis, GDP contracted by 12.2% in the second quarter, marking the worst decline in two decades, comparable to the Tom Yum Goong crisis. However, this time the impact is broader, affecting everyone from street vendors and farmers to salaried workers and business owners, from small to large enterprises.

The only ones seemingly unaffected are civil servants and state enterprise employees, who have become the envy of many, as their jobs remain secure regardless of the economic situation. This also includes those working in mega companies that dominate the economy with little competition. Nevertheless, the workforce in these sectors, totaling nearly 2 million people, plays a crucial role in sustaining consumer spending during tough times.

Consumer purchasing power is weak, primarily due to declining incomes and rising debts. The tourism sector, which has been hit the hardest, will likely be the last to recover, and it remains uncertain when that will happen.

First, it is essential to understand that the workforce is not limited to those under social security, which accounts for about 11.295 million people (Section 33). There are also nearly ten million informal workers, or slightly more, who make up the country's labor force. This figure does not include farmers. These workers are primarily employed in the private sector, mainly in industries such as tourism, retail, services, and freelance work.

It is estimated that the "COVID-19 impact" has led to a 75-76% drop in both foreign and domestic tourists. Currently, there is a slight recovery, even with the Thai Travel Thai project, which focuses on holidays or long weekends, but it cannot compensate for the lost income from foreign tourists.

The industrial sector has also been significantly affected, with current production capacity (CPU) at only 52.84%. Consider whether the workers in these sectors are still comfortable. As of June, 3,985 factories had temporarily closed, affecting approximately 802,600 workers, primarily in the automotive and parts, electronics, plastics, metals, and service sectors such as hotels, retail, transportation, and food. It is estimated that there are about 2.18 million at-risk workers.

An economy that has contracted by double digits will undoubtedly impact the labor market. It is not a matter for the economic team or the Ministry of Labor to argue that the unemployment figures are unfounded or that there are not many jobless people. The government's solutions must consider all perspectives.

Even the youth who are raising concerns about the issues should not be dismissed or discredited. It must be acknowledged that a severe economic recession comes with high unemployment rates. It is misleading to say that the Ministry of Labor has employers looking for hundreds of thousands of workers when sometimes the information contradicts itself. Fortunately, the Prime Minister has prioritized this as an urgent issue, with plans to address employment and unemployment systematically presented at the Cabinet meeting in Rayong (August 25), where they discussed creating a million job positions.

If a vaccine is found, which is still in the trial phase, it is hoped that consumer purchasing power will return soon, but it is estimated that it may take at least two years to return to normal. Therefore, economic planning must be cautious to prevent further deterioration.

What can be done? More than half of Thailand's economy relies on exports in industry, agriculture, and services. How to address this remains more of a question than an answer.

As for the economic stimulus measures that the Cabinet will soon approve, it is essential to examine the previous budget allocated for the 1.9 trillion baht loan decree. There is money available, but there are obstacles preventing its use, such as low-interest soft loans. Much of the funds remain unused because banks are hesitant to lend. Meanwhile, the 400 billion baht relief fund has been in place for several months but has not been utilized significantly, not to mention the 400 billion baht security loan decree for the Bond Market Fund (BSF), which is reportedly still stagnant.

This does not include the complications from the political crisis outside of parliament, where many people are raising three fingers or tying white ribbons. This is a call for the economic team chosen by the Prime Minister to come in and address these issues, which have been delayed for too long... Can they manage it?

SOURCE: www.bangkokbiznews.com