Thailand’s economic recovery looks more K-shaped, threatens to leave many behind

Economy & Business.

Thailand’s economic recovery looks more K-shaped, threatens to leave many behind

Thailand’s economic recovery looks more K-shaped, threatens to leave many behind

Written By - Patra Manas. 17-11-2020.

Thailand’s economy contracted less than expected in the third quarter with official data from the state planning agency showing the country shrank 6.4% in July- September from last year in contrast to earlier forecasts of a 8.6% decline.

It’s tempting to say Thailand is looking at a U-shaped recovery but using the U-shaped letter to represent Thailand’s economic recovery is deceiving, in the sense that it gives the impression that the economy is recovering overall with a better GDP outlook.

A more accurate presentation of the Thai economy and it’s recovery path is the K- shaped recovery.

A K-shaped recovery is being increasingly used as an accurate presentation of the economy when recovery is happening but it is unequal. U,V,W. Most of the forecasts for economic recovery thus far are named for letters that match their shape on graphs of economic indicators. But a new letter is entering the vocabulary of economists of late as economic crisis drag on in most countries.

A K-shaped recovery occurs when an economy recuperates unevenly and there’s a separate trajectory for two segments of the society. Continue Reading Below...

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These different paths follow the direction of the two spokes that poke out from the vertical line on the”K” and represents the growing gap between winners and losers in the economy.

It’s no secret that Thai SMEs dependent on foreign tourism and exports have been hit hardest by the global pandemic. 

The SME segment is the biggest hirer of workers while the big industry segment such as petrochemical, electronics and automobile although contributing 49% of the country’s exports, accounts for just 4% of total jobs and employment across the three industries.

Policy makers need to take heed of the downward slope and bring out policies that is targeted at this segment.

Big corporations and industry leaders have the staying power to survive and grow while SMEs need continued financial and policy support from the government. 

A recovering SME segment will drive economic growth while at the same decrease unemployment which may become a chronic problem if left untreated.

 The focus on the downward arrow of the K will help ascertain whether government economic policies are working to alleviate the hardship of SMEs and close the widening income inequality.