Connect with us

Economics

Is Thailand boom sustainable ?

Boris Sullivan

Published

on

Thailand is booming again, but the foundations of its growth revival are wobbly. Unless policies and politics become more robust, the Southeast Asian nation’s economy may find its momentum hard to sustain.

While this year’s expected GDP growth rate of about 5 percent is close to the economy’s potential rate of expansion, the quality of growth is suspect. A subsidy for first-time car buyers saw a jump in auto loans last year. A 30 percent increase in unsecured personal lending prompted a recent warning from the Bank of Thailand about the growth of household debt.

Farmers, meanwhile, are getting a state-sponsored income boost. The government is buying their rice crop at above-market prices for a second year at an estimated annual fiscal cost of 1 percent of GDP. The spending priorities are lopsided. The construction of a $12 billion water management system, which could prevent the recurrence of 2011 floods, is unlikely to start this year.

The Bank of Thailand is not a “big supporter” of consumption stimulus

says Prasarn Trairatvorakul, the central bank governor. The monetary authority chief is also mindful of the hard slog ahead in doubling per capita income to $10,000 a year, the minimum required for Thailand to become a rich nation.

transportmap

Thailand has big investment plans for the next seven years, but this may drive public debt to the roof. Graphic: bangkokpost.com

Escaping its middle-income trap will be difficult because the country is running out of cheap labour. About 10 percent of the workforce consists of immigrants from Myanmar. More opportunities for them at home could mean higher costs for Thai companies, says Kampon Adireksombat, a TISCO Securities economist in Bangkok.

A 23 percent minimum-wage increase and a drought in the agricultural belt in the north and northeast could lift inflation this year above the central bank’s estimate of 2.8 percent.

The biggest risk for investors, though, is politics

In the 17 months that she has been in power, Prime Minister Yingluck Shinawatra has not pushed too hard for an amnesty for her brother and former prime minister, Thaksin Shinawatra, who was ousted in a 2006 military coup and is currently living in Dubai. But there is always a risk of a tactical mistake that will put pro-Thaksin “red shirts” and anti-Thaksin “yellow shirts” on a collision course. Unless Thai politics becomes more stable, the government will have little interest in boosting competitiveness and every incentive to carry on giving people a good time.

 

via Analysis & Opinion | Reuters.

At a seminar on “Challenge for the Future of the Thai Economy in 2013” held by the Economic Reporters Association yesterday, former finance minister MR Pridiyathorn Devakula said two challenges were how to grow the Thai economy and how to keep the economy stable. To achieve both of these, the government has to pay more attention to the public debt.

Pridiyathorn said the current government was less concerned about fiscal discipline than populist policies to ensure voter support, and that could result in damage to the nation’s finances.

Before introduction of the rice-pledging programme, the public debt stood at Bt8.6 trillion. If the scheme is continued, the debt could reach Bt10.3 trillion, or 63.7 per cent of gross domestic product, by the end of September 2019, he predicted.

Comments

Economics

Thai economy to grow 4% in 2021 following 6.5% decline in 2020

The World Bank is now expecting the Thai economy to see 4% growth this year, and a 4.7% growth in 2022, despite current challenges from the new wave of COVID-19 infections.

Olivier Languepin

Published

on

Crowded downtown area in Bangkok

The World Bank now expects that the Thai economy to expand by 4 per cent in 2021, according to the latest World Bank Thailand Economic Monitor report “Restoring Incomes, Recovering Jobs” released on Wednesday (Jan 20).

(more…)
Continue Reading

Banking

BoT sees mild impact of new COVID-19 wave on the economy

The Bank of Thailand (BoT) does not see the new wave of COVID-19 infections as having as much of an impact on the economy as the first wave, as fewer businesses have had to be suspended.

National News Bureau of Thailand

Published

on

BANGKOK (NNT) – Despite a new and wider wave of COVID-19 infections in the country, the Bank of Thailand (BoT) has assessed that the economic impact of the situation will not be as severe as the first wave as the effects of the virus are not as pronounced, and public health preparations, including plans for vaccination, are in place.

(more…)
Continue Reading

Economics

COVID-19 brings first consumer confidence drop in 3 months

Consumer confidence in December 2020 was measured at 50.1 points, down from 52.4 the previous month. Economic confidence was also down to 43.5 from 45.6 points.

National News Bureau of Thailand

Published

on

BANGKOK (NNT) – Concerns linked to the new wave of COVID-19 infections has weighed on both daily life and business, resulting in the first drop in the Consumer Confidence Index in 3 months.

(more…)
Continue Reading

Latest

Most Viewed

Subscribe via Email

Enter your email address to subscribe and receive notifications of new posts by email.

Join 13,634 other subscribers

Trending