A recent research report from Krungsri reflects a multifaceted challenge facing Thailand's economy, marked not just by typical economic fluctuations but simultaneous pressures from two fronts.
On one side are major global economic shifts, including international conflicts, transformative technologies, an aging society, and environmental issues. On the other are domestic problems, notably income growth lagging behind living costs, high household debt, and shrinking disposable income.
These dual pressures are impacting businesses, employment, and consumer purchasing power, presenting Thailand's economy with a significant challenge: how much growth it can achieve and whether Thai people and businesses are prepared to adapt.
From worldwide changes, 10 key trends can be identified that are shaping the economic direction and everyday lives of Thai people:
1. A divided world: shifts in trade and investment directions.
Conflicts among major powers, wars, and trade barriers are reshaping global trade. Businesses now prioritize production bases that are secure and located in allied countries, rather than solely focusing on lowest-cost locations.
Relocating production to neighboring countries or those with strong political and economic ties presents an opportunity for Thailand to attract new investments but also intensifies competition.
2. Global conflicts impact energy prices, business costs, and living expenses.
Conflicts in strategic areas, especially the Middle East, risk pushing oil and energy prices higher, while Thailand remains reliant on energy imports.
Rising energy costs affect not only fuel prices but also transportation, production expenses, and prices of everyday consumer goods.
3. Declining birth rates and increasing elderly population alter economic structure.
Thailand is becoming a super-aged society, with fewer newborns leading to a shrinking future workforce and increased welfare and eldercare burdens.
However, these changes also create business opportunities in health products, eldercare services, and longevity-related markets that are growing in importance.
4. Growing consumer focus on health and quality of life.
Consumer behavior is shifting from prioritizing convenience and price alone to choosing products and services that support health and well-being.
Health foods, personal care devices, health tracking technologies, and services that empower self-care are becoming expanding markets.
5. AI and automation transform work methods and business competition.
AI and automation technologies help businesses work faster and more efficiently but also pressure workers whose skills don't match new demands, and traditional businesses that struggle to adapt.
The key challenge is not just adopting AI but developing workforce skills and reshaping businesses to compete in a fast-changing technological era.
6. Rising cyber threats increase business costs to protect data.
As businesses digitize operations and critical data, cyberattack and data breach risks grow.
Investments in cybersecurity and data protection have become unavoidable costs, especially for organizations reliant on digital systems.
7. Intensifying natural disasters affect businesses and people's incomes.
Climate change causes frequent and severe natural disasters like floods, droughts, and extreme weather.
The impact extends beyond damage to homes and property, affecting agricultural output, transportation, factories, and supply chains, all influencing incomes and business costs.
8. Stricter environmental regulations compel Thai businesses to adapt quickly.
Many countries are making environmental standards key trade conditions, forcing exporters to adopt eco-friendly production, reduce carbon emissions, and use clean energy.
Though costly, this shift opens new opportunities in clean energy, green technologies, and finance supporting sustainable economic transition.
9. Rising essential goods prices pressure unavoidable household expenses.
High energy and transportation costs likely pass through to prices of essentials like food, daily necessities, and consumer goods.
These expenses are monthly necessities that households cannot easily reduce, limiting funds available for savings, investments, or other spending.
10. Slow wage growth traps labor in low value-added jobs.
Many Thai workers remain in retail, wholesale, construction, food services, and agriculture sectors, which often have low productivity and value-added.
Limited value addition restricts wage increases, causing slow income growth that fails to keep pace with rising living costs.
Though these 10 mega-trends seem globally significant, their effects hit closer to home, showing up in prices, business costs, job opportunities, and incomes of Thai people.
Domestic issues further reduce Thai households' capacity to absorb economic shocks, with data showing clear financial constraints for most households.
"Low-income households form a large proportion, spending most of their money on essentials. Over 57.2% of Thai households earn no more than 24,000 baht monthly, with 53.4% of expenses on food and transportation," the report states.
This means more than half of monthly earnings go to necessities, leaving limited funds for savings, investment, or emergency preparedness.
Although nominal incomes appear to rise, after subtracting government aid and inflation effects, real income growth is low. In other words, while earnings may be higher than in the past, purchasing power relative to prices and living costs does not increase.
Examining households earning up to 24,000 baht monthly reveals a clear gap between those with and without debt.
These figures indicate many households lack sufficient reserves for unexpected events; illness, unemployment, or income loss even briefly may force reliance on borrowing to cover daily expenses.
Another point of interest is that national consumption growth does not reflect improved financial status for all households.
Spending growth is mainly supported by financially strong households earning more than 51,658 baht monthly, who retain sufficient purchasing power.
Meanwhile, low-income households face high living costs, slow income growth, and debt burdens, meaning aggregate economic figures may not fully represent all groups' realities.
When global economic pressures converge with domestic household financial problems, three factors warrant attention as they could intensify Thailand's economic difficulties in the near future.
1. Rising prices but stagnant economy and incomes risk stagflation.
If international conflicts keep energy prices elevated, production and transportation costs may continue rising before businesses pass these to consumer prices.
Simultaneously, economic slowdown could lead service, retail, and construction sectors to reduce working hours or hiring, causing people to face higher living costs without income growth, risking economic stagnation alongside inflation.
2. Businesses must invest to adapt, but SMEs may lack sufficient capital.
Technological and trade rule changes require Thai businesses to invest more in AI adoption, workforce skill development, and environmentally compliant production processes.
Large enterprises generally have more capital and personnel readiness than smaller operators, many of whom face liquidity constraints and limited access to financing.
Failure to adapt promptly could erode competitiveness, harm business operations, and negatively impact employment and workers' incomes.
3. Short-term stimulus may be insufficient without structural reforms.
Cost-of-living support and consumption stimulus might sustain the economy temporarily, but without resolving household debt, enhancing workforce skills, and improving business productivity, sustainable income growth is unlikely.
Thailand's key challenge is building new high-value industries, attracting technology investments, developing labor skills, and creating better-paid jobs alongside upgrading social welfare and assistance systems.
Ultimately, coping with a changing world is measured not only by how much Thailand's economy grows but by how much income and opportunity growth benefits the majority.
If the global economy advances faster while Thai incomes lag behind rising living costs and businesses lack capital to adapt, pressures from both sides may trap Thailand in a cycle of low growth and vulnerability.
Source: Krungsri Research
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