News / Asia

Confidence in Thai Economy Slumps Amid Political Turmoil

Anti-government protesters eat dinner outside a McDonald's restaurant in central Bangkok. Protesters occupy the same shopping and business districts, Feb. 6, 2014.
Anti-government protesters eat dinner outside a McDonald's restaurant in central Bangkok. Protesters occupy the same shopping and business districts, Feb. 6, 2014.
Ron Corben
Business confidence in the Thai economy has slumped to its lowest levels in more than four years amid the nation's ongoing political turmoil. A senior World Bank economist said recovery is still possible over the year's second half, if political tensions ease and public and private sector spending resumes.

In its latest indicator released Thursday, the Federation of Thai Industries warned Thailand's ongoing political turmoil had triggered a dramatic loss of confidence, with surveys showing indices at their lowest since June 2009.

Loss of confidence

The Federation pointed to a decline in overall domestic orders, sales volumes, production output as well as poor business performance.  Analysts say private sector investors are holding back until the political situation clears.

World Bank senior economist Kirida Bhaopichitr said an easing in political tensions is needed for the economy to reach a four percent growth rate by year's end.
 
Also the government is struggling to make payments in a controversial rice price pledging scheme. At present, thousands of farmers are still to be paid some $4.2 billion.

"Our assumption is that the political unrest will end in the middle of the year. So if it does not, the four percent will not be reached. Farmers will be paid their 130 billion baht in the pledging program by the end of the first quarter. So if they are not, then their consumption will be affected," said Kirida.

State-owned think tank, National Economic and Social Development Board (NESDB), reported the economy growing in the December quarter at just six-tenths of a percent, leaving 2013 growth at under three percent, well down from six-and-a-half percent in 2012.

Political turmoil

The slower growth came as anti-government protests in November started to affect local demand and tourism. Tourism officials say losses could amount to as much as $322 million.

The protests have evolved into demands for Prime Minister Yingluck Shinawatra to resign, amid calls for political reforms.  

Other economic concerns include central bank warnings over a sharp rise in household debt.

The World Bank's Kirida said income disparities between Bangkok and the provinces need to be addressed to reduce inequalities and, in turn, ease underlying political tensions. "If you want to resolve this political tension in the future, and at the same time help Thailand to grow inclusively, issues of inequality have to be resolved. Only if everyone in Thailand can participate in growth, it's very difficult for Thailand to actually move up the value chain and become a high income country," he stated.

Akio Egawa, a researcher on the Thai economy from the Tokyo-based Economic and Social Research Institute (ESRI), said slower rates of growth of less than four to five percent also undermine Thailand's efforts to lift the economy towards higher earnings and higher productivity.

"Thailand must grow at four/five percent. Otherwise, Thailand will fall into the income trap. But in the current situation the government cannot make an effort to raise the economic growth rate and that's a problem. The very low growth rate is due to the political conflict. So the political conflict must be eased and that cannot be solved easily," said Egawa.
 
Thailand remains in the grip of uncertainties as the government faces legal challenges on differing fronts. So far, efforts to broker a negotiated settlement between the government and protesters have failed, leaving the country on an uncertain path forward.

You May Like

Video Miami Cubans Divided on New US Policy

While older, more conservative Cuban Americans have promoted anti-Castro political movement for years, younger generations say economically, it is time for change More

2014 Sees Dramatic Uptick in Boko Haram Abductions

Militants suspected in latest mass kidnapping of over 100 people in Gumsuri, Nigeria on Sunday More

Video Cuba Deal Is Major Victory for Pope

Role of Francis hailed throughout US, Latin America - though some Cuban-American Catholics have mixed feelings More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Sudan School Becomes Target of Aerial Attacksi
X
December 19, 2014 12:45 AM
The school dropout rate is at an all-time high in Sudan's South Kordofan state because many schools have been destroyed during the three-year civil war between the government and SPLA-N rebel forces. Adam Bailes visited Sudan's Nuba Mountains' region and reports many children are simply too scared to go to school
Video

Video Sudan School Becomes Target of Aerial Attacks

The school dropout rate is at an all-time high in Sudan's South Kordofan state because many schools have been destroyed during the three-year civil war between the government and SPLA-N rebel forces. Adam Bailes visited Sudan's Nuba Mountains' region and reports many children are simply too scared to go to school
Video

Video VOA Reporter Tours Devastated Peshawar School

Islamist militants wearing military uniforms and strapped with explosives attacked a military run school Tuesday in the northwestern Pakistani city of Peshawar. At least 141 people were killed in the horrific attack, most of them young students. VOA reporter Ayaz Gul visited the devastated school and attended the funeral of the principal who courageously tried to save her students from the deadly attack.
Video

Video Nigerians Fleeing Boko Haram Languish in Camp Near Capital

In its five-year effort to impose Islamic law in northeastern Nigeria, the Boko Haram extremist group has killed thousands of people and forced hundreds of thousands to flee. Some of those who ran for their lives now live in squalor on the edges of the capital, Abuja. Chris Stein reports for VOA.
Video

Video Putin Says Russian Economy Will Emerge Stronger

Russian President Vladimir Putin has said his country's sinking economy will not only recover but also become stronger, despite falling oil prices and Western sanctions over Ukraine. VOA's Daniel Schearf reports.
Video

Video Detained Turkish Journalists Follow Teachings of US-Based Preacher

The Turkish government’s jailing of critical journalists has sparked international condemnation and is being seen as an effort to undermine the followers of an ailing Turkish preacher based in the United States. VOA religion reporter Jerome Socolovsky has more.
Video

Video ‘Anti-Islamization’ Marches Increase Tensions In Germany

Anti-immigrant rallies in Germany have been building in recent weeks, peaking Monday night in the city of Dresden where tens of thousands of people turned out to demonstrate against what they call the ‘Islamization’ of the West. Germany has offered asylum to more Syrian refugees than any other country, and this appears to have set off the protests. Henry Ridgwell reports from London.
Video

Video Aceh Rebuilt Decade After Tsunami, But Scars Remain

On December 26, 2004 there was an earthquake in the Indian Ocean so powerful it caused the Earth’s axis to wobble a few centimeters. Onshore on the island of Sumatra, the resulting tsunami was devastating. A decade later, VOA Correspondent Steve Herman reports from Banda Aceh, Indonesia, where although there is little remaining evidence of the physical devastation, the psychological scars among survivors remain.
Video

Video Refugees Living in Kenya Long for Peace in the Home Countries

Kenya is host to numerous refugees seeking safe haven from conflict. Immigrants from Somalia face challenges in their new lives in Kenya. Ahead of International Migrants Day (December 18) Lenny Ruvaga has more for VOA News from the Kenyan capital.

All About America

AppleAndroid