Thailand’s Economic Revival is Greatly Exaggerated

High household debt levels -- more than 80 percent of gross domestic product -- will continue to depress spending.

High household debt levels — more than 80 percent of gross domestic product — will continue to depress spending.


BANGKOK – Thailand may still be one of the best place in South East Asia to Visit, even after its military coup last spring. But tentative signs of an economic rebound hardly resolve the deep structural problems that continue to afflict its politics, economy and society.

The World Bank believes the country will remain the slowest-growing economy in Southeast Asia through 2016. High household debt levels more than 80 percent of gross domestic product will continue to depress spending. While the Military coup leaders have put some money in citizens’ pockets with millions in payments to rice and rubber farmers, household consumption is projected to grow only 1.5 percent next year. The central bank’s easy-money policy has led mostly to a run-up in stock prices.

Previous military-led governments in the 1980s in Thailand were able to jump-start growth through heavy state-directed investments. However today’s ruling generals face a more complex challenge.

It’s too late for Thailand to regain low-end manufacturing jobs, which have shifted to cheaper neighbors like Cambodia and Vietnam. To move up the value chain, Thailand needs to invest in education, research and development, and infrastructure — something the Military juntas have proved to be no better at than civilian governments. Plans to spend $60 billion on transportation infrastructure during the next 10 years will help but not immediately and not enough.

The military’s road map for returning power to civilians doesn’t inspire very much confidence. Early drafts suggest that the proposed political reforms will be designed not to heal Thailand’s divides, but to ensure that followers of exiled former Prime Minister Thaksin Shinawatra cannot return to power through elections. Even assuming that army-chief-turned-Prime Minister Prayuth Chan-Ocha keeps his pledge to step down by the end of 2015 which is now slated for early 2016 is hardly a recipe for long-term political stability.

Thailand cannot move forward by repressing the democratic aspirations of half its population. Doing so will undercut the legitimacy of the country’s courts and regulatory agencies, as well as the parliament, which will be dominated by appointed rather than elected legislators. They will exacerbate Thailand’s already appalling inequality (in which the richest 10 percent of Thais own as much as 75 percent of national wealth). Perhaps most damaging, this will remove the need for Thai opposition parties to develop a true political alternative to Thaksin’s electoral machine. Any reforms that do not address that fundamental problem are only skin-deep.

By David Shipley



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Posted by on Nov 28 2014. Filed under Economy & Business. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.
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