Doubts Persist Over Thailand’s Economy Despite New Cabinet
BANGKOK – The appointment of Thailand’s new cabinet somewhat dispels some political uncertainty, however huge doubts remain over its ability to stimulate the economy as the Thai Baht continues it’s strength.
On Wednesday King Maha Vajiralongkorn endorsed the cabinet of junta chief-turned civilian Prime Minister Prayuth Chan-ocha, almost 108 days after highly disputed elections.
Familiar faces in the line-up promise continuity with the policies of the previous government, analysts said, but pushing measures through parliament could be challenging, given the new government’s slim majority.
The most important economic post, that of deputy prime minister in charge of economic matters, is being retained by Somkid Jatusripitak, who held it in the outgoing Junta government.
Although Finance Minister Uttama Savanayana is new, he leads the party that backed Prayuth and served as the junta’s former industry minister, after having worked in the private sector.
“I’m positive,” said Sarun Sunansathaporn, an economist at the Bank of Ayudhya, who predicts second-quarter annual growth of just 2.4%, and 3.2% for 2019.
“This will mean the former junta’s policies will continue.”
He added, “They should also implement economic measures to boost investors confidence as the economy in the first half was very bad.”
Southeast Asia’s second-largest economy grew 2.8% on the year in the first quarter, its weakest since 2014, as public investment, exports and tourism slowed amid rising global trade tension and domestic political uncertainty.
Last year’s growth of 4.1% was the fastest in six years.
In the region, only Singapore is growing more slowly.
Business sentiment slipped in May while consumer confidence hit its lowest in 21 months in June.
Big Stimulus Projects
“The new cabinet names give the private sector some confidence that large infrastructure projects will go ahead.
They should also urgently tackle farmers problems,” said Supant Mongkolsuthree, chairman of the Federation of Thai Industries.
“But confidence is one thing, whether they do their work is another.”
The new cabinet is expected to bring in stimulus measures worth as much as 100 billion baht ($3.3 billion), which could boost growth by 0.7 percentage points, said Thanavath Phonvichai, of the University of the Thai Chamber of Commerce.
On Wednesday, Deputy Prime Minister Somkid said the coalition would discuss stimulus measures to help offset the impact of a delay in the next state budget, due in October.
There are also concerns over the fractious coalition’s ability to drive initiatives, such as the $45-billion Eastern Economic Corridor project for investment in the industrial east.
Businesses complained of delays in government spending even under the junta. Now major decisions will also need to go through a parliament where the coalition holds a slim majority.
Charnon Boonnuch, an economist with Nomura in Singapore, said he was skeptical of the government’s ability to adopt needed economic reforms and attract investment.
Another economist in the wealthy city-state, Prakash Sakpal of ING, said, “The test of vulnerability will likely come during the passage of key legislation in parliament.” ($1=30.62 baht)