Political Unrest Dragging On The Economy ; Thailand’s real GDP surged by 5.8% year-on-year (y-o-y) in Q409, snapping four quarters of negative growth and confirming a full-year contraction of 2.5%. On our part, we have become slightly more upbeat about Thailand’s economic prospects in 2010, highlighting upside risks to our 3.6% real GDP forecast for the year given the plethora of positive data releases over the last few months.
That said, the as yet unresolved political unrest will be a considerable drag on the economy. We remain wary about the trajectory of the global economy beyond H110, especially as the ongoing eurozone sovereign debt crisis unfolds. Moreover, our global macro team is currently expecting a dip in the US and Chinese economies going into 2011, which would undoubtedly affect Thailand. We are therefore maintaining our projection that real GDP growth will remain somewhat muted at 3.7% in 2011.
A conflict of interest between the pro-Thaksin Shinawatra Red Shirts, anti-Thaksin Yellow Shirts, the military and Thai Prime Minister Abhisit Vejjajiva has severely dented the possibility of a quick resolution to Thailand’s political woes. In our view, Abhisit is running out of time and options to end the ongoing street protests held by the opposition Red Shirts for over two months. Indeed, previous attempts by Abhisit to capture the leaders, move the protestors by force and even offering a road map to elections on November has not been met with much success. With patience likely to be running low on all sides, we fear that Abhisit might be compelled to use force, or the Yellow Shirts might take to the streets, leading to further violence in the coming months.
Regarding policy rates, political uncertainties and benign inflation will keep the Bank of Thailand (BOT ) from hiking rates before Q310.
Indeed, consumer price inflation is still relatively low, coming in at 3.0% y-o-y and 0.6% month-on-month in April. However, given that the producer price inflation has been rising sharply, averaging 11.0% y-o-y and 1.1% m-o-m for the three months ending April, pointing to looming price pressures, we expect the BOT to start normalising policy in early Q310, taking the benchmark repo rate from the current 1.25% to 1.75% by end-2010.
Thailand’s economy is dragged down by the turbulent political situation that has stemmed the flow of foreign investors. More recently, the stalled projects at the Map Ta Phut industrial estate has further dampened investor confidence in the country. Although Thailand scores a decent 62.2 in The business environment rating, ranking it fourth (out of 16) in its regional peer group, we note that this score does not fully take into account the headwinds posed by the political situation and the loss of confidence in Thailand as a preferred foreign direct investment destination.
Thai fruit exports to FTA markets up 107 percent
China, Malaysia, Singapore, Indonesia, the Philippines, Hong Kong, Australia and Chile are top importers of Thai fruits, especially fresh durian, mangosteen, longan and mango. Thai exporters are able to benefit from FTA privileges.
BANGKOK (NNT) – Thailand’s fruit exports continue to increase, despite the sluggish global economy caused by the COVID-19 pandemic, with key trade partners being countries that have free trade agreements (FTAs) with the kingdom.
The Future of Asia: greener but with a public and private debt hangover
The COVID-19 pandemic has been a perfect storm, destroying jobs, worsening poverty and inequality, and creating a public and private debt problem—especially for countries and firms already in fragile financial health beforehand
50:50 campaign may not get immediate extension
BANGKOK (NNT) – The government’s 50:50 co-pay campaign expiring on 31st March may not be getting an immediate campaign extension. The Minister of Finance says campaign evaluation is needed to improve future campaigns.
The Minister of Finance Arkhom Termpittayapaisith today announced the government may not be able to reach a conclusion on the extension of the 50:50 co-pay campaign in time for the current 31st March campaign end date, as evaluations are needed to better improve the campaign.
Originally introduced last year, the 50:50 campaign is a financial aid campaign for people impacted by the COVID-19 pandemic, in which the government subsidizes up to half the price of purchases at participating stores, with a daily cap on the subsidy amount of 150 baht, and a 3,500 baht per person subsidy limit over the entire campaign.
The campaign has already been extended once, with the current end date set for 31st March.
The Finance Minister said that payout campaigns for the general public are still valid in this period, allowing time for the 50:50 campaign to be assessed, and to address reports of fraud at some participating stores.
The Fiscal Police Office Director General and the Ministry of Finance Spokesperson Kulaya Tantitemit, said today that a bigger quota could be offered in Phase 3 of the 50:50 campaign beyond the 15 million people enrolled in the first two phases, while existing participants will need to confirm their identity if they want to participate in Phase 3, without the need to fill out the registration form.
Mrs Kulaya said the campaign will still be funded by emergency loan credit allocated for pandemic compensation, which still has about 200 billion baht available as of today.
Subscribe via Email
Thai fruit exports to FTA markets up 107 percent
China, Malaysia, Singapore, Indonesia, the Philippines, Hong Kong, Australia and Chile are top importers of Thai fruits, especially fresh durian,...
Digital Revolution and Repression in Myanmar and Thailand
Activists have also proactively published social media content in multiple languages using the hashtags #WhatsHappeningInMyanmar and #WhatsHappeningInThailand to boost coverage...
3 Reasons to Be Optimistic About the Baht Right Now
Probably one of the most important factors for the rise of the Baht is the continued weakness of the US...
Will Thailand’s plan for quarantine-free tourism set a global trend?
According to the Tourism Authority of Thailand, the quarantine-exemption measures implemented in Phuket will be extended to five other key...
Thailand Approves Latest Economic Relief Package for Businesses
Some 250 billion baht (US$8 billion) was allocated for soft loans while the remaining 100 billion baht (US$3.2 billion) will...
Southeast Asia remains a hot spot for plastic pollution
The use of plastics is deeply embedded in our daily lives, in everything from grocery bags and cutlery to water...