Bangkok, Thailand – Sheltering from the sun on a street corner, Kridsada Ahjed rues the day he got involved with the loan sharks who now gobble up most of his daily earnings.
“I went to the loan sharks because people like me – with no assets or savings – cannot qualify to get 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.
Nearly $1.5bn of that debt is estimated to be made up of high-interest informal loans.
Kridsada’s personal crisis is part of a wider malaise that has gripped Thailand’s economy
After decades of solid growth, Thailand is displaying all of 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-paid, low-skilled work.
“Thailand suffers not only from the slow return of demand from major export markets, but also from the changing nature of globalisation that hurts its competitiveness,” Pavida Pananond, a professor of international business at Thammasat Business School, told Al Jazeera.
“International trade is being driven more by value-added services that require higher local skills and capabilities. This requires a systemic upgrading of the labour force and local firms’ sophistication beyond short-term handouts and investment incentives.”
Thailand’s Southeast Asian peers, including Indonesia, have bounced back from the pandemic faster [Ajeng Dinar Ulfiana/Reuters]
Whereas other Southeast Asian countries are bouncing back strongly from the economic shock of the COVID-19 pandemic, Thailand has faltered.
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 neighbouring Malaysia, a significantly more developed economy with lower expectations for growth, registered a 3.7 percent expansion.
Despite the recovery of Thailand’s key tourism sector, which accounts for about one-fifth of the economy, its prospects are not looking much better in 2024.
The World Bank on Monday said it expected the Thai economy to 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.
Srettha, a property mogul-turned-politician, proudly calls himself the “salesman” of Thailand.
Since taking power in a compromise with the royalist establishment to block the reformist Move Forward Party, the 62-year-old political neophyte travelled the world to seek out free trade deals and promote the country as a base for global manufacturing supply chains.
But after years of Bangkok shirking from fundamental economic reforms, there are fears the economy may be resistant to a quick fix.
Critics say that Thailand’s military leaders for years turned off global investors, became too reliant on China’s economic rise and squandered the potential of young Thais by neglecting to fund an education system capable of producing a workforce suited to the digital era.
The World Bank said in a report released last month that two-thirds of Thai youth and adults were “below the threshold levels of foundational reading literacy”, while three-quarters had poor digital literacy skills.
Meanwhile, Thailand’s English language proficiency ranks among the lowest in the Association of Southeast Asian Nations (ASEAN).
To stimulate the economy, Srettha has proposed providing a 10,000-baht ($280) cash handout to virtually every Thai aged more than 16 – a policy economists and political rivals have slammed as wasteful – expanding visa-free entry to more countries, and legalising casinos.
Prime Minister Srettha Thavisin has described Thailand’s economic situation as a crisis [Andrew Caballera-Reynolds/AFP]
“He faces political risks from ‘doing’ and ‘not doing’ these measures,” Move Forward Party deputy leader Sirikanya Tansakul told Al Jazeera.
“With the big cash handout scheme, he faces legal risks from unlawful government borrowing and of coalition discontent. But if he cannot implement this biggest electoral campaign, he faces public distrust.”
Srettha has also become embroiled in 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 percent, stressing the need to safeguard its independence.
In a bleak assessment earlier this year, Pranee Sutthasri, a member of the central bank’s Monetary Policy Department, said the country had “seriously 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, instead of making products related to artificial intelligence technology, Thailand keeps making downstream electronics products that people no longer want,” she told reporters in late January.
For Srettha, who was not the public’s first choice at 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 sorts itself out.”
For many Thais struggling to get by, the faltering economy brings more pressing practical concerns.
Hoo Saengbai, a 61-year-old lottery ticket vendor in Bangkok, said her monthly income has more than halved to as little as $110 over the last few years as people cut back on unnecessary spending.
“I’m not so sure about this government or any government any more,” she told Al Jazeera. “I’m just trying to put food on the table one day at a time. I eat if I earn anything, I don’t eat if I don’t earn. That’s all there is.”
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
VICTORIA – British Columbia is forecasting a record budget deficit and a rising debt of almost $129 billion less than two weeks before the start of a provincial election campaign where economic stability and future progress are expected to be major issues.
Finance Minister Katrine Conroy, who has announced her retirement and will not seek re-election in the Oct. 19 vote, said Tuesday her final budget update as minister predicts a deficit of $8.9 billion, up $1.1 billion from a forecast she made earlier this year.
Conroy said she acknowledges “challenges” facing B.C., including three consecutive deficit budgets, but expected improved economic growth where the province will start to “turn a corner.”
The $8.9 billion deficit forecast for 2024-2025 is followed by annual deficit projections of $6.7 billion and $6.1 billion in 2026-2027, Conroy said at a news conference outlining the government’s first quarterly financial update.
Conroy said lower corporate income tax and natural resource revenues and the increased cost of fighting wildfires have had some of the largest impacts on the budget.
“I want to acknowledge the economic uncertainties,” she said. “While global inflation is showing signs of easing and we’ve seen cuts to the Bank of Canada interest rates, we know that the challenges are not over.”
Conroy said wildfire response costs are expected to total $886 million this year, more than $650 million higher than originally forecast.
Corporate income tax revenue is forecast to be $638 million lower as a result of federal government updates and natural resource revenues are down $299 million due to lower prices for natural gas, lumber and electricity, she said.
Debt-servicing costs are also forecast to be $344 million higher due to the larger debt balance, the current interest rate and accelerated borrowing to ensure services and capital projects are maintained through the province’s election period, said Conroy.
B.C.’s economic growth is expected to strengthen over the next three years, but the timing of a return to a balanced budget will fall to another minister, said Conroy, who was addressing what likely would be her last news conference as Minister of Finance.
The election is expected to be called on Sept. 21, with the vote set for Oct. 19.
“While we are a strong province, people are facing challenges,” she said. “We have never shied away from taking those challenges head on, because we want to keep British Columbians secure and help them build good lives now and for the long term. With the investments we’re making and the actions we’re taking to support people and build a stronger economy, we’ve started to turn a corner.”
Premier David Eby said before the fiscal forecast was released Tuesday that the New Democrat government remains committed to providing services and supports for people in British Columbia and cuts are not on his agenda.
Eby said people have been hurt by high interest costs and the province is facing budget pressures connected to low resource prices, high wildfire costs and struggling global economies.
The premier said that now is not the time to reduce supports and services for people.
Last month’s year-end report for the 2023-2024 budget saw the province post a budget deficit of $5.035 billion, down from the previous forecast of $5.9 billion.
Eby said he expects government financial priorities to become a major issue during the upcoming election, with the NDP pledging to continue to fund services and the B.C. Conservatives looking to make cuts.
This report by The Canadian Press was first published Sept. 10, 2024.
Note to readers: This is a corrected story. A previous version said the debt would be going up to more than $129 billion. In fact, it will be almost $129 billion.
NANAIMO, B.C. – Former Bank of Canada governor Mark Carney says he’ll be advising the Liberal party to flip some the challenges posed by an increasingly divided and dangerous world into an economic opportunity for Canada.
But he won’t say what his specific advice will be on economic issues that are politically divisive in Canada, like the carbon tax.
He presented his vision for the Liberals’ economic policy at the party’s caucus retreat in Nanaimo, B.C. today, after he agreed to help the party prepare for the next election as chair of a Liberal task force on economic growth.
Carney has been touted as a possible leadership contender to replace Justin Trudeau, who has said he has tried to coax Carney into politics for years.
Carney says if the prime minister asks him to do something he will do it to the best of his ability, but won’t elaborate on whether the new adviser role could lead to him adding his name to a ballot in the next election.
Finance Minister Chrystia Freeland says she has been taking advice from Carney for years, and that his new position won’t infringe on her role.
This report by The Canadian Press was first published Sept. 10, 2024.
