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It looks like you're going to have to resew the seam and take it in past that fraying. Can you afford to lose half an inch or so (a couple of cm) ? I would use seam tape (seam binding) also. If you don't sew- take it to a seamstress. They should be able to fix it.
There's a product in the states made by Dritz called patch kit (you iron on a clear binding). I recommend this to fix woven and knit materials that are fraying. I think that resewing the seam will definitely work but if you don't want to lose too much material, you can try a patch kit and close in a closer seam. Good luck!
I agree with Kim. I think I'd put a little fray check around the hole, too, just to be safe. If it's on a side seam, make sure you take on the same amount on the other side so it's not lop-sided.