25 October 2023
As more countries and trade organisations worldwide look towards the APAC region for future growth, Thailand has taken a proactive approach. The Thailand Prime Minister, Srettha Thavisin, recently visited Saudi Arabia to participate in the ASEAN-GCC Riyadh Summit. This is a significant move as, in the past, the two countries have experienced diplomatic difficulties. However, comments coming from the summit and discussions with Saudi Arabian authorities suggest a very different future.
While the headlines confirm that both parties are looking to enhance their long-term trading relationship, there are other areas in which they are looking to work together:-
Many believe politics is the key to a long-term, prosperous relationship after a period of uncertainty between the two countries. The Thai prime minister has already confirmed his government would look to back Saudi Arabia in its pursuit of the 2034 World Cup and the Riyadh Expo 2030.
While the investment ideas are likely to work both ways, at this moment in time, there is a significant focus on the Thailand energy market. Saudi Aramco is one of several companies which have come forward as a potential investor in Thailand, going as far as signing a memorandum of understanding just last year.
As we know from recent events, global politics are becoming crucial to international security. The more parties willing to work together, the more likely success against global terrorism and threats to not only countries but also cultures, energy and other areas of everyday life.
Many people may not be aware, but there are currently 6,000 Thai labourers living in Saudi Arabia, working on numerous projects. In a further hand of friendship, the Thailand Prime Minister thanked the Saudi government for looking after the workers. While the Gulf region is extremely strong in areas such as oil and gas, the green technology sector is attracting substantial international investment. Could this be a further area where the two countries can work together?
The Thailand authorities have been highly proactive regarding trade, looking to host the inaugural Saudi-Thai Coordination Council in Bangkok. This approach is expected to be rewarding for the country, which is keen to secure further investment and international cooperation.
The Prime Minister recently announced plans to increase investment in the country with a mix of cash handouts and loan moratoriums. While the credit rating agencies have questioned this plan, there are hopes that a $500 billion fiscal injection will prompt additional short, medium and long-term economic growth.
In recent times, the Thailand economy has been one of the fastest growing in the world, but there are concerns about the short-term outlook. The Bank of Thailand is still maintaining economic growth expectations of 2.8% for 2023 and 4.4% for 2024, although third-party forecasts are less optimistic. However, the Bank of Thailand figure does include the controversial $500 billion economic stimulus programme.
There is no doubt that the APAC region as a whole is attracting significant interest from international partners. Already the largest trading bloc in the world, this position is set to strengthen in the short, medium and longer term. A proactive approach by the Thailand authorities and the planned massive fiscal stimulus programme bode well for the future. While the credit rating agencies have questioned what will be enormous borrowings for the fiscal programme, with a chance of a credit downgrade, time will tell if this is a risk worth taking. Back to News