Ex-premier Thaksin Shinawatra said last night that he would continue his legal fight in Thailand “till the end” before taking his fight overseas to the International Court of Justice, referring to an appeal against Friday’s court verdict seizing part of his assets.
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In January 2009, the overall economy in Thailand continued to contract from the same period last year, with continual large contractions in manufacturing production and export. Private consumption and investment trended downward, in line with a considerable drop in import. Furthermore, major crops production and price continued to decelerate, resulting in a slowdown in farm income. Nevertheless, tourism sector observed a smaller contraction. External stability remained sound with high international reserves as well as trade and current account surpluses following a marked decrease in import. Regarding internal stability, January’s inflation in Thailand turned negative
for the first time since October 1999. Even though the unemployment rate remained low, manufacturing employment continued to decline.
Thailand is among the region’s more open economies, with exports accounting for around 65% of gross domestic product (GDP)
New Prime Minister Abhisit Vejjajiva’s government has responded to the crisis with vigorous fiscal pump priming, including direct cash injections into the grass roots economy. With public debt at 23% of GDP, international reserves at US$110 billion, and 2008 balanced budget, the government arguably has plenty of fiscal room to maneuver.
In January the Cabinet approved a 117 billion baht supplementary budget, which included various measures aimed at buoying the economy, including cash 2,000 baht handouts to nine million civil servants and workers nationwide, job creation programs and community investment funds.
It represents one of few times in recent years that fiscal and monetary policies have been complementarily calibrated. A grinding political conflict, pitting supporters and detractors of former Prime Minister Thaksin Shinawatra who was ousted in a 2006 military coup, has hobbled successive governments’ ability to devise and implement effective economic policies.
The debilitating conflict climaxed last November when military-linked anti-government protestors closed Bangkok’s two international airports for over a week, crippling the money-spinning tourism and air freight dependent export sectors. The Bank of Thailand has estimated the closure cost the Thai economy as much as 290 billion baht, with hotels estimated to have lost 140 billion baht due to cancellations.
Labor experts note that private sector union membership rates run at less than 5%, diminishing the risk of organized protests against factory and service sector layoffs. So, too, will an unemployment insurance scheme implemented in the wake of the 1997-98 Asian financial crisis and a recent government decision to expand Social Security Fund compensation for unemployed workers to eight months from 6.5 previously.
Meanwhile a new government small business loan program for unemployed workers requires that the recipients return to their home provinces to receive the funds. Still there are early indications that the government has not committed enough resources to tide over the rural grass roots sector. Aggrieved farmers in northern Lampang province in late January blocked roads and protested in front of the provincial hall on complaints they had not been involved in a corn mortgage scheme.
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