Thai military junta addresses flagging economy
Army seeks to reassure business as end of democratic process leaves economic future uncertain
Soldiers block a street to prevent a protesters’ rally at the Victory Monument in Bangkok. Photograph: Diego Azubel/EPA
Thailand is settling down to life under military rule and, while it would be wrong to say that there is widespread support for the army taking over power, there was a sense of exhaustion at the violence and disruption on the streets of the capital Bangkok.
Some people even talk enthusiastically about the effect of the coup, hopeful of a peace dividend. As one European businessman pointed out, during the last military putsch in 2006 annual economic growth expanded to 5.1 per cent from 4.6 per cent on the back of strengthening exports.
One move the junta has taken that has proven popular is to pay out more than €2.2 billion owed to 800,000 rice farmers. This rice subsidy was seen as a form of vote-buying by the former Pheu Thai Party government led by ousted prime minister Yingluck Shinawatra, but it was a bold populist move, and making good on what is owed will certainly buy the military some time with the country’s important farming community.
Thailand’s neighbours are all set to benefit from Thailand’s problems. Vietnam, Indonesia, Malaysia and the Philippines are all expected to see their economies grow by more than 5 per cent, while Thailand is on the verge of a recession after gross domestic product shrank in the first quarter.
The median of 26 economists’ forecasts for average 2014 GDP growth was 1.6 per cent in a Bloomberg quarterly survey released last week, compared to 3.4 per cent previously.
Investment and production is falling too. Thailand’s manufacturing output fell in April for the 13th month in a row, while exports fell for a third time this year. The state planning agency last month forecast total investment may drop 1.3 per cent this year from an earlier prediction of a 3.1 per cent increase.
Japanese companies are advising their workers not to travel to Thailand, although many of the guests at my hotel in Bangkok were Japanese.
During a military coup there are constant rumours, and one was that the junta would spend big to stimulate the economy with infrastructure projects and other plans. This would explain the presence of Japanese engineers at a time when many foreigners were leaving to avoid the curfew.