Fuelling the economy with ‘good’ jobs

POLICY FOCUS

- Somkiat Tangkitvanich

This file photo, dated Jan 22, 2025, shows street food vendors waiting for customers at a morning market along a street in Bangkok.

(AFP)

Thailand’s economy, once a regional powerhouse, is now gasping for air. Yet the next wave of growth is within reach. With the right fuel and new engines, we can regain momentum. But first, we must understand what went wrong.

Economies rarely collapse overnight. They fade when they cannot recover from shocks or adapt to new realities. That is Thailand's story.

Repeated crises — from the 1997 Tom Yam Kung crash and the 2008 financial crisis to the Covid-19 pandemic — pushed growth from 7% to 5%, then below 4%, and now just around 2%. During the Covid years, growth per person was only 0.1%.

Meanwhile, global trade has flipped. The era of globalisation is giving way to geopolitical rivalry and protectionism. With outdated engines, Thailand has slipped to the bottom of Asia; only Japan grows more slowly. Stay on this path, and Vietnam's per-capita income will overtake ours within 20 years. The middle-income trap will tighten. High-income status will drift out of reach.

When growth stalls, households feel it first. Inequality ensures that. Household debt now exceeds 80% of GDP. Banks avoid SME lending. Governments turn to subsidies, pushing public debt even higher. The centre cannot hold.

The problem is not unemployment. It's low wages. Workers cannot survive without overtime. Labour's share of GDP keeps shrinking, deepening inequality and social strain.

Corruption rises when an economy is stuck: police acting like crime syndicates; clergy scandals; judicial lapses, even sports associations accused of cheating athletes. Slow growth cracks the system far beyond economics.