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Thailand: ‘Two trends, one economy’
Two divergent trends have prevailed in the Thai economy, with cross-border sectors thriving while domestic ones remain stagnant, according to a bank research unit.
The economy has clearly split into two recently, said Phacharaphot Nuntramas, head of economic and financial market research at Siam Commercial Bank’s Economic Intelligence Center.
The sectors involving foreign countries such as exports and tourism have grown in line with the world economic recovery while domestic ones remain stuck in the slow lane as a majority of people do not feel the economy is improving, he said.
“Incomes of salaried people — the middle class who buy the most durable and semi-durable goods — have picked up very slowly as a result of tying wages to inflation,” he said.
Since low oil prices have kept inflation in check for a while, salaries and bonuses in the private sector have barely increased, resulting in a lack of confidence to spend.
“The changing trade trend toward e-commerce has also kept prices and inflation low. However, the real cost of living is much higher than inflation, especially the costs of transport, ready-to-eat food and services, forcing people to watch what they spend,” he said.
He concluded tying salary hikes to inflation could result in discrepancies with the reality people face every day.
Charl Kengchion, managing director of Kasikornbank’s K-Research, said wages had increased against gross domestic product growth while improved exports had failed to attract new investments and working hours did not increase much.
“Besides, while the household debt-to-GDP ratio dropped below 80%, the amount of debt per household has increased.
“We might have to wait until next year for the economy to improve,” he concluded.
Source: http://www.bangkokpost.com/business/news/1318219/two-trends-one-economy