Thailand's economic downturn could cause some retail stores in the provinces to shutter, according to Loxley Trading, a consumer goods distribution arm of trading conglomerate Loxley Plc.
Ouychai Rangchaikul, chief executive of Loxley Trading, said there is still no sign of any positive factors suggesting a recovery in the second half of 2024.
He said the size of the fast-moving consumer goods (FMCG) market, which includes packaged food, beverages and toiletries, would continue to contract.
The rising cost of goods and higher energy prices as well as the high level of household debt would likely affect middle-income customers, said Mr Ouychai.
The household debt-to-GDP ratio was 91.3% in the fourth quarter of 2023, according to the National Economic and Social Development Council.
He said during the pandemic the government initiated economic stimulus by injecting funds through schemes such as the Pracharat welfare card, a social welfare card for low-income earners.
These campaigns helped maintain the market during that period, said Mr Ouychai.
It has been almost a year now without any major government stimulus schemes to improve the economy, leaving local retail businesses to feel the impact from a sluggish economy to some extent, he said.
"The purchasing power of consumers is not in good shape, especially in the provinces. We see some local retail stores shuttering as they've been affected by the economic slowdown," said Mr Ouychai.
During turbulent economic conditions, Loxley relaxed the financial conditions for stores, such as conditions pertaining to bill collection, he said.
Referring to the digital wallet scheme, which will distribute 10,000 baht to 50 million individuals, Mr Ouychai said the scheme might not create as strong a level of monetary circulation as anticipated.
He said any promotional campaign wouldn't help stimulate demand at the moment, instead only seizing market share from competitors.
Mr Ouychai said Loxley Trading would secure a level of growth higher than its peers, as some of its new FMCG products are sold in more markets.
