Economy
Bank of Thailand Reports Rise in 'Zombie' SMEs
The Bank of Thailand has identified a significant increase in 'zombie' small and medium-sized enterprises, prompting a shift in financial support strategies.
According to a report by Prachachat Business, the Bank of Thailand (BOT) has observed a rise in 'zombie' businesses—firms unable to cover interest expenses with operating profits—from 2.7% to nearly 6%. BOT Governor Withai Rattanakorn noted that SME credit growth has remained in negative territory for 16 consecutive quarters, highlighting a prolonged period of financial strain within this sector.
The central bank has indicated that the financial system cannot sustain every struggling enterprise. Consequently, the focus of support is shifting toward businesses that demonstrate the potential to adapt and remain viable in the current economic climate.
For residents and expatriates, this shift may signal changes in the local business landscape. As financial institutions become more selective in their lending, some smaller, less competitive local shops or service providers may face closure or consolidation. This could lead to a reduction in the variety of small-scale businesses in certain areas.
It remains to be confirmed how specific government policies will be adjusted to support these 'high-potential' SMEs and what the long-term impact will be on the broader Thai economy. Observers are waiting to see if this strategy will successfully stabilize the SME sector or if further economic contraction is expected in the coming quarters.
