SCB EIC, a research centre under Siam Commercial Bank (SCB), has raised concerns that the economy might be on the verge of entering a “lost decade”.
Drawing from Japan’s experience, SCB EIC warns that Thailand could face economic stagnation extending until 2050.
The term “lost decade” is used to describe Japan’s economy during the 1990s, characterised by two key features: (1) prolonged low economic growth and (2) a loss of confidence among the Japanese people that the economy would recover to its former growth levels, leading them to save more and spend less.
Japan entered its lost decade following the asset price bubble crisis (1986-91).
The asset price bubble crisis ultimately impacted household balance sheets, resulting in Japan experiencing an extended economic stagnation lasting over three decades.
Comparing the Thai economy since the outbreak of the Covid-19 pandemic with Japan’s economy when the asset bubble burst, it is evident that both countries saw their real GDP and private sector confidence deviate from pre-crisis trends in a similar manner, with no signs of returning to pre-crisis trends.
“Thailand’s economy is likely to enter into such a pattern during the post- pandemic period with real GDP and private confidence deterioration,” warned SCB EIC chief economist Somprawin Manprasert.
Source: Bangkok Post
