So far, political stability has not salvaged the Thai economy

[webfact]

STREETWISE
So far, political stability has not salvaged the Thai economy
Achara Deboonme

BANGKOK: -- Six months on from the coup, the Thai economy remains in bad shape. And the outlook - at least in the short term - is also bleak, despite optimism among some local economic houses.

Data last week from the National Economic and Social Development Board came as a shock. After shrinking 0.5 per cent in the first quarter, the economy expanded 0.6 per cent in the second - not much but enough to steer us out of technical recession. The shock was delivered by third-quarter growth of only 0.4 per cent, despite a new government being in place with full power to launch whatever policies necessary - a luxury not afforded its predecessor in its last months.

Gundy Cahyadi, a DBS Bank economist, admitted that the third-quarter growth did not meet the bank's forecast. The figure means the Thai economy grew just 0.15 per cent in the first nine months. Initially projecting 4.1 per cent growth for the fourth quarter, DBS is now convinced the rate will be a mere 3 per cent, putting 2014 GDP growth at a maximum of 1 per cent - well below the World Bank's 2.5 per cent forecast announced in October. Notably, that figure had already been revised down by the World Bank from the 4 per cent announced in February.

With the NESDB reducing its forecast of annual growth from 1.5-2 per cent to 1 per cent, the Bank of Thailand has dropped hints it will follow suit with its projection, now at 1.5 per cent. Meanwhile, Cahyadi didn't rule out the possibility the economy could grow at only 0.8 per cent this year. Tisco Securities' forecast is the lowest, at 0.7 per cent.

What about next year?

For now, DBS foresees growth of 3.8-4 per cent but adds an interesting note: "Given the lower base from this year, this in fact represents a downward revision in the trajectory of growth too."

In the backdrop to this news, five students in Khon Kaen and a young activist in Bangkok were held for "attitude adjustment". Forums on national and domestic affairs have also been halted midway, including one at Thammasat University that featured former finance minister Korn Chatikavanij, and a meeting between evicted villagers and their lawyers.

Prime Minister General Prayut Chan-o-cha has said that despite his unhappiness over martial law, it's still necessary. He also warned that any gestures of public opposition to the coup could place those involved in jeopardy. It all suggests one thing: martial law will be with us for some time, as the junta aims to secure political stability.

But how will this translate to economic stability?

The Fiscal Policy Office is hoping the economy will grow by 4 per cent this quarter on the same period last year. If this is realised, full-year growth will reach 1.4 per cent, in line with the office's estimate. It said that export figures had improved more than expected while the tourism sector in October showed growth for the first time in 10 months. It also pinned its hopes on the subsidy programme for farmers.

But some economists are sceptical. An article in The Economist last month featured an estimate that the latest coup could cost Thailand US$20 billion to $30 billion over two years. "An empirical analysis of the impact of coups on other national economies shows that growth slows, on average, by 2.1 percentage points in the year of a coup, 1.3 and 0.2 in the first and second year after the coup," it said.

The World Bank expects Thailand's neighbours to show improved growth next year: Myanmar at 7.8 per cent, Cambodia at 7 per cent, Laos at 7.9 per cent, and Indonesia, Malaysia, the Philippines and Vietnam all between 5 per cent and 6.9 per cent. The forecast for Thailand is just 4.5 per cent. Needless to say, this would make Thailand the least attractive just as the Asean Economic Community (AEC) is drawing more investment into the region.

In this scenario, it is easy to predict where the new investment will go. In the past months, there has been a notable absence of huge investment projects for Thailand. In recent news, major Japanese trading house the Mitsubishi Corporation plans to invest up to US$1 billion in Indonesia. Meanwhile Samsung Electronics announced earlier this month its plans to spend up to $3 billion building a new smartphone factory in Vietnam.

On tourism, with martial law in place, big-spending visitors are likely to continue avoiding Thailand. What can Tourism and Sports Minister Kobkarn Wattanavrangkul do when insurance firms refuse to cover visitors to a country under martial law? Well, she hopes Thailand can follow up on the Asian Beach Games in Phuket by hosting the World Beach Games. And after damage done to Thailand's image by the Koh Tao murders, she plans to have tourists on the island wear ID wristbands to boost safety.

On the export front, much depends on the pace of recovery in the US next year, as well as that of Japan, while the situation in Ukraine could further dampen the outlook in Europe. Meanwhile China is bracing for lower economic growth as it negotiates its own rebalancing act. Increased trade with Asean looks certain.

In Thailand, public spending is set to rise. But the long-term benefits will be limited if most of the rise goes to subsidies for farmers.

Elsewhere, the announcement of a hike in fares has boosted the mood of taxi drivers. It seems that a collective realisation that the May coup might not be good for the economy will only arise only when more university graduates can't find jobs.

Source: http://www.nationmultimedia.com/opinion/So-far-political-stability-has-not-salvaged-the-Th-30248452.html


-- The Nation 2014-11-25

[BSJ]

Even the 'Cat in the Hat' knows there a tough times ahead but in a country where nepotism, cronyism and zenophobia run rampant they only have themselves to blame.

[Robby nz]

Not really surprising with private debt being the highest ever and export markets weak.

Not much the country can do about the international situation and it will take a while for infrastructure projects to have any impact on the internal economy.

[Suriya4]

Thai people are now happy, thanks prayuth for returning happiness to all thai people and Muslim people of the south. Other thing is not important at all.

[Fat Haggis]

The Muslims in the Sourh are so happy they're burning down schools and shooting teachers of that's their way if expressing happiness Id hate to as them pissed off!!!

This is a stark contrast to the headline from yeaterdays thread about the Thai economy and business on the up !!

The Nation sure isn't pulling any punches these days

[phutoie2]

Plus the students do not appear to be on the happiness page.

[noitom]

Thailand - hard times are a comin'.

[chainarong]

It is all great to comment after history has passed you by , but really just what has Thailand achieved in the past 10 years, nothing, you might like to pause and think who would invest , in a country that cannot get its Mojo together, sad to say if you condense 10 years down into 5 all you would see is strife and sovereign risk, even though Khun Chuan caused the Thaitanic(1997/98) and Asia Imploded , Thailand was going better than China, so Thailand can do , the problem being you need the right set of circumstances and the political will, under the present circumstances all that appears is a repeat of 2006.

[Boxclever]

This is an easy fix. The great leader just needs to order a survey done that will show the economy has grown 93% over that past 6 months. Job done!

[ExPratt]

While the coup provided temporary political stability for Thai nationals , long term stability is still undetermined for big investors

The Asian beach games are mentioned in the article . I was in Patong last weekend during the games and I would say there were not as many people staying in Patong as there was this time last year, even with the games. Bangla was pretty busy on Saturday night but beach was pretty quiet as were the early evening pubs and restaurants

[Eric Loh]

Really no brainer that political instability is the bane of all investors. Those who falsely believe that the coup has brought back political stability are out of touch with reality. The longer the junta stay in power and delay the election, the more damage it will wreck to the economy.

[SteveFong]

you will know things are really bad when th ladyboys ask for their balls back

[Laughing Gravy]

The title is misleading. You can hardly call the country as political stability. Socially controlled. Politically stable, not at all. Eventually a political solution needs to be found but that usually comes with some form of democracy and not the way the current control is happening.

Edited November 25, 2014 by Laughing Gravy

[BudRight]

Gee, how could all the populist schemes not pay off? Better raise taxes on beer again.

[BritManToo]

When has a _ictatorship ever pro_uce_ a successful economy?

[SteveFong]

Libya was doing great before he suggested created a new Arab currency backed by gold

[h90]

It is all great to comment after history has passed you by , but really just what has Thailand achieved in the past 10 years, nothing, you might like to pause and think who would invest , in a country that cannot get its Mojo together, sad to say if you condense 10 years down into 5 all you would see is strife and sovereign risk, even though Khun Chuan caused the Thaitanic(1997/98) and Asia Imploded , Thailand was going better than China, so Thailand can do , the problem being you need the right set of circumstances and the political will, under the present circumstances all that appears is a repeat of 2006.

Chavalit + Banharn + Thaksin was it. Chuan took over and repaired it

[cup-O-coffee]

Only six months? It takes longer than six months to build a single house here! What do they expect?

Interestingly enough, when one compares building a house here to reconstructing government, reform and such, the similarities are uncanny.

Give the general a break. He's no different than the others before him, and more than likely the ones to follow.

It's like getting angry or upset at "normal".

[RustBucket]

As a quick example...

Myanmar expected growth 7.8% and on target.

Laos 8.3% and on target.

Cambodia 7.2% and on target.

All this with very little tourism compared with Thailand. The reason I use tourism as a massive advantage for Thailand is that it is by far the most lucrative income for a country that has almost zero outbound deficit. It is almost pure income for the economy.

I can see Thailand becoming the sick man of ASEAN, it is already the political sick man, soon it can become the economic sick man. When the AEC kicks in, Thailand will soon see that things will be getting a lot tougher. A far cry from all the spouted BS that this country will dominate the AEC.... On the contrary, it will be the whipping boy.

Thailand to the AEC will be what the UK is the the EU.

[Ulic]

Fixing the Thai economy that has been run into the ground by corrupt politicians with populist policies like

the rice scheme, car buyer scheme, 33% minimum wage increase will take longer than six months. Especially

when the world economy in general is in the dumper. On top of that years of skimming on infrastructure

projects. The turn around could take years.

[ginjag]

The Muslims in the Sourh are so happy they're burning down schools and shooting teachers of that's their way if expressing happiness Id hate to as them pissed off!!!

This is a stark contrast to the headline from yeaterdays thread about the Thai economy and business on the up !!

The Nation sure isn't pulling any punches these days

Extremist worldwide collective religious Hatred.----------------headlines vary too much---one in favour of the PM another like this inviting anti PM posts,

Suppose topics create and love to create division, depends who writes them.

Graft being really sorted-mega style (latest police) another on the thread today--negative topic. Amazing.

[Fred Flinstone]

Quote

The World Bank expects Thailand's neighbours to show improved growth next year: Myanmar at 7.8 per cent, Cambodia at 7 per cent, Laos at 7.9 per cent, and Indonesia, Malaysia, the Philippines and Vietnam all between 5 per cent and 6.9 per cent. The forecast for Thailand is just 4.5 per cent. Needless to say, this would make Thailand the least attractive just as the Asean Economic Community (AEC) is drawing more investment into the region.

UnQuote

Its good to see Thailand's Neighbours doing so well-

Being the lest attractive for new investment , might help Thailand in the longer run.

Facing the home truths sometimes is necessary and preferred to slogans about being "great " or "'Happy"'

Bangkok Businesses might eventually apply pressure to make changes.

I just can't see improvements while its in its current format.

Sure tourism is deeply affected by the climate of fear and censorship

And rule of military -

​But business is being undermined when clients don't know what tomorrow will bring there?

Thailand is a wonderful country and people but perhaps it needs to learn valuable lessons before moving forward ?

But its certainly , compared to its surrounding countries , its failing to function and causing investors to think twice

​I hope it returns to the growth it enjoyed a few years ago and the tourists and investors return …along with elections

Edited November 25, 2014 by Fred Flinstone

[Suffinator]

If Thailand could move forward from it's nationalistic and protectionist policies then the economy would be so much better. AEC isn't going to do them any favours whilst they view foreigners as a threat rather than a benefit to the economy.

[rickirs]

It is not only the coup ruled government that has impacted the economy for the last 5-6 months but also the preceding anti-government protests for the prior seven months as well - more than a year of virtual economic shutdown for the nation. I estimate the cost to the economy to be about 3.5% of GDP growth for 2014 AND 2015. That brings the cost of political conflict and coup to about Bt. 60-70 billion, about equal to the total net worth of the Crown!

The only strategy left for the Junta is a massive, immediate economic stimulus (aka government spedning spree) but thus far it has been slow to do so. Gen. Prayuth has been active negotiating international development and trade agreements but these will not benefit the economy in the near-term. And now Somkid Jatusripitak, an adviser to the NCPO, is arguing that "gross domestic product should grow on its fundamentals, not from an injection of capital. GDP growth should be based on its capability to develop products in terms of innovation and strength, which could help the country compete with others. A capital injection could only boost the economy temporarily." The Nation 2014-11-20. Somkid's advice could bring Gen. Prayuth's economic house of cards down in time for the Junta's one-year anniversary.

The foreign consulting company Grant Thronton doesn't support a 4% growth for 2015. "The economy is expected to show stronger growth of 3.5 per cent next year after stumbling at an estimated 1 per cent this year - but that is still less than its sustainable rate of 4 per cent.." The Nation 2014-11-20. If the Junta stumbles further with its economic policies, a 2-3% growth in GDP might not be an unreasonable prediction.

[wabothai]

Most of the world had to learn through hardship, 1st and 2nd WW.

[Krataiboy]

Stability achieved through repression is not reality stability at all. There are signs of increasing domestic as well as international disquiet with the failure of the junta to live up to its pledge of early elections and a return to normalcy once a period of calm had been achieved.

One feels the lid is being held down ever tighter on a pot which is starting to come to the boil. Some of the steam needs to be allowed to escape, by involving the public at large and their political representatives, in what is going on. Otherwise there is a very real danger of an explosive backlash which could cause lasting harm to the economic as well as social fabric of the Kingdom.

[heybruce]

Amazing, an intelligent, factual (other than describing present circumstances as "political stability") article using referenced sources and numbers. If The Nation makes a habit of this I'll subscribe. My only comments are "I agree", except for the political stability part.

[kingalfred]

And the property bubble will burst in Bangkok to pile on the misery.

[billd766]

It is all great to comment after history has passed you by , but really just what has Thailand achieved in the past 10 years, nothing, you might like to pause and think who would invest , in a country that cannot get its Mojo together, sad to say if you condense 10 years down into 5 all you would see is strife and sovereign risk, even though Khun Chuan caused the Thaitanic(1997/98) and Asia Imploded , Thailand was going better than China, so Thailand can do , the problem being you need the right set of circumstances and the political will, under the present circumstances all that appears is a repeat of 2006.

Do you truly believe that Chuan Leekpai caused the Tom Yam Goong financial crisis?

Look here to see who was the PM at the time (Chavalit Yongchaiyud) and the one before him, Banharn Silpa Archa.

http://en.wikipedia.org/wiki/List_of_Prime_Ministers_of_Thailand

Strangely enough Thaksin Shinawatra was in the cabinet of both governments.

Chuan Leekpai was PM from 22 September 1992 until 13 July 1995 and was not elected as PM again until 09 November 1997, AFTER the financial crash.

It is all great to comment after history has passed you by, even though Khun Chuan caused the Thaitanic(1997/98)

It would be good if you did a little research before you post your revision of history which was incorrect by the way.

[yellowboat]

Should Thailand fall behind its nieghbors the Army will be held responsible and the elites of the country will be held responsible..