Thailand's economy is back on the fast track to growth - buoyed by exports, government and consumer spending and low interest rates. But there are fears that easy credit is fueling rising levels of debt that may put a break on growth by mid-2004.
Consumers are spending and retailers' cash registers keep chiming, driving Thai economic growth at a pace that makes a distant memory the dark days of the 1997 financial crisis. Consumers are leading the way - backed by more than three million new credit cards issued last year. From mobile phones to new vehicles, retail sales volumes are heading higher.
Thailand's economic growth - now at better than six percent - is running only second to China's fast growth in the Asia region. Exports are up and stock prices are also higher. Share trading volume is averaging more than $600 million a day as foreign capital has followed on the good economic news.
All this is welcome news as Thai Prime Minister Thaksin Shinawatra prepares this month to showcase the economy to leaders of the 21-member Asia Pacific Economic Cooperation forum - APEC.
Mr. Thaksin says he has adopted a blend of "social capitalism" - a combination of government spending and policies such as cheap health care, a $25,000-a-village loan scheme, farm debt suspension and asset-to-capital conversion plans to increase the amount of cash in circulation. Critics call the policies populist, but so far Mr. Thaksin has proven the skeptics wrong.
In an address to foreign correspondents in Bangkok, Mr. Thaksin painted a glowing picture of revival of an economy that once led Asia into a currency crisis in 1997.
"Economic growth is healthy and on the rise," he says. "After facing over 10 percent negative growth in 1998, the economy started to turn around and register positive growth of 1.9 percent, 5.3 percent and 6.2 percent respectively in 2001, 2002 and the first half of 2003."
And despite the SARS virus and conflict in Iraq earlier this year, he is confident growth will hold at six percent by year's end.
"All the other indicators of the Thai economy are progressing most satisfactorily," says Mr. Thaksin. "The industrial sector has expanded; the prices of agricultural goods are on the rise with agricultural income this year increasing by 25 percent. Unemployment is down from 3.6 percent in 2000 to 2.2 percent last year."
But Arporn Chewakrengkai, chief economist with the Government Pension Fund, says a major concern is whether the recovery will be sustained. "The concern is that whether that economic recovery how long it is going to be sustained. The second thing is, that in terms of local factors, is will the commodity prices still continue to be favorable," she says. "The other issue is the strengthening of the baht. If the baht is strengthening, will it affect our export performance in the next year?"
While Mr. Thaksin believes he has the right combination of economic forces working, others are much less certain. Leading academics are warning the "good times" are built on shallow short-term consumption and personal borrowing.
Critics say the village loan funds and debt relief programs for farmers are burdening the rural sector with even more debt. In urban areas, a proliferation of credit cards is raising concerns over personal debt. One business college found that more than one third of those surveyed had personal debts - often linked to credit cards - as much as 25 times their monthly income.
Sophon Onkgara, an economic commentator with "The Nation" newspaper, says this is very worrying for the future. "I'm concerned about the wide spread of indebtedness in rural areas because of a number of populist loan programs handed out by the government," he says. "They have lured villages in rural areas to seek loans without clear purpose of how to spend and how to make use of those loans to improve their own livelihood."
But for the moment, all the indicators are positive for Mr. Thaksin and the Thai economy.
The real test will be in the run-up to general elections due in early 2005 - which will prove whether the "good times" are here to stay or Mr. Thaksin's strategies have merely built a fragile stack of economic cards.