The Thailand economy is continuing its slow recovery as the current global financial challenges affect currencies and markets. Even though the country is the second-largest market in Southeast Asia, its economic COVID-19 pandemic recovery has lagged compared to other regional nations. According to Reuters, Thai economy trends from its central bank—the Bank of Thailand (BOT)—show a 3.3% GDP growth this year, followed by 3.8% next year, better than the 1.5% growth in 2021.

Central bank governor, Dr Sethaput Suthiwartnarueput, addressed the issue of Thailand’s weakened currency, saying the BOT had taken measures to curb excessive moves by the baht without going against market forces. Presently, the baht is hovering around a 16-year low against the US dollar, trading at about 38 baht per dollar, leading to concerns about its stability. The governor allayed concerns by saying the baht was stable and had robust external strength due to high foreign reserves. 

Headline inflation—the total inflation figure in an economy—was at a 14-year high in August at 7.86, but the BOT expects it to go down to a range of 1%-3% in 2023. Interest rates increased by a quarter to 1.00 to cope with the average inflation figure of 6.3% this year. Predictions suggest that next year’s inflation number will be 2.6%.

Will Thai tech startups catch up with the rest of Southeast Asia in 2023?

Thai startups remain resilient and are proliferating to meet the emerging needs of the country. Fueling their maturation and viability is the digital transformation of the Association of Southeast Asian Nations (ASEAN) and the spread of COVID-19 and its variants in the last few years. Even so, startups remain vulnerable to the effects of a weak baht, rising interest rates, inflation, and others.

Challenges faced by Thai startups in this economy

According to the Reuters report, Thailand’s economy will grow due to increased consumption, cheap exports, and recovery in the tourism sector. The BOT expects the tourism industry to receive 9.5 million foreigners, compared to 428,000 visitors in 2021. Foreign tourists visiting Thailand next year could be about 21 million people, which is more than half the number in pre-pandemic 2019.

Thailand’s finance minister, Arkhom Termpittayapaisith, predicted an 8% increase in exports this year at a business seminar. He added that while a weak baht helps exports, supply chain issues in the electronic and automobile sectors are preventing exports from reaching their full potential.

Global economic headwinds are reverberating in Thailand and ASEAN as the region experiences rising commodity and energy prices, inflation, a slowdown in investments, supply chain disruptions caused by geopolitical conflicts, and other significant issues. COVID-19 remains a significant risk for ASEAN, with countries implementing a variety of trade-restrictive measures and lockdowns to combat the pandemic. 

A comeback in many sectors in Thailand has therefore been slow, but the finance minister says it is still clear that recovery is happening, which is good news. For founders, several problems are hurting Thailand’s startup ecosystem:

  • Lack of skilled talent

Like some other Southeast Asian countries, Thailand faces a massive tech talent crunch. The region’s employment scene is a mess, with mass layoffs, rescinded job offers, and employees needing upskilling. Skilled workers may also be unsuited to new positions because they do not have the experience to succeed in the roles.

  • Funding challenges

The economic downturn has forced investors to tighten their purse strings as they look for high-quality startups to invest in, and applications for investment in Thailand dropped 42% in the first half of the year. Thailand’s Board of Investment (BOI) stated it would continue to monitor the situation and adjust its policies to promote the country to global investors.

  • Slow growth and scalability

Navigating the pandemic has been difficult for everyone, but the adoption of technology could be faster in the country. According to the eConomy SEA report 2021, Thailand and the Philippines had the highest proportion of new users. These and other growth statistics show that the Thai people have a long way to go in integrating technology into their lives. As a result, startups have experienced slow growth and challenges to scalability.

  • Inadequate support

Thai startups have not received adequate government support in terms of funding and regulatory backing. There are concerns regarding ease of operations, cooperation within the startup ecosystem, difficulties with mergers, acquisitions, and listing, banning cryptocurrency payments, and other issues. 

Hope for Thailand in the coming years

Despite the doom and gloom, there is hope for the Thailand economy in the coming years. The Thai economy trends in tech-related sectors, such as financial technology (fintech), show great potential. The Asian Development Bank (ADB) released Thailand’s Evolving Ecosystem Support for Technology Startups report, highlighting growth in fintech, eCommerce, and high-development impact startups in education (edtech), environment (greentech), and other sectors. These trends look set to continue for years to come.