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

Koreas Mark 61st Anniversary of War Armistice

Muted observances on both sides of heavily-armed Demilitarized Zone that separates two decades-long enemies More

Judge Declares Washington DC Ban on Public Handguns Unconstitutional

Ruling overturns capital city's prohibition on carrying guns in pubic More

Pricey Hepatitis C Drug Draws Criticism

Activists are using the International AIDS Conference to criticize drug companies for charging high prices for life-saving therapies More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Students in Business for Themselvesi
X
Mike O'Sullivan
July 26, 2014 11:04 AM
They're only high school students, but they are making accessories for shoes, fabricating backpacks and doing product photography - all through their own businesses. It's the result of a partnership between a non-profit organization that teaches entrepreneurship and their schools. VOA's Mike O'Sullivan and Deyane Moses met the budding entrepreneurs near Los Angeles.
Video

Video Students in Business for Themselves

They're only high school students, but they are making accessories for shoes, fabricating backpacks and doing product photography - all through their own businesses. It's the result of a partnership between a non-profit organization that teaches entrepreneurship and their schools. VOA's Mike O'Sullivan and Deyane Moses met the budding entrepreneurs near Los Angeles.
Video

Video Astronauts Train in Underwater Lab

In the world’s only underwater laboratory, four U.S. astronauts train for a planned visit to an asteroid. The lab - called Aquarius- is located five kilometers off Key Largo, in southern Florida. Living in close quarters and making excursions only into the surrounding ocean, they try to simulate the daily routine of a crew that will someday travel to collect samples of a rock orbiting far away from earth. VOA’s George Putic has more.
Video

Video Not Even Monks Spared From Thailand’s Junta-Backed Morality Push

With Thailand’s military government firmly in control after May’s bloodless coup, authorities are carrying out plans they say are aimed at restoring discipline, morality and patriotism to all Thais. The measures include a crackdown on illegal gambling, education reforms to promote students’ moral development, and a new 24-hour phone hotline for citizens to report misbehaving monks. Steve Sandford reports from Bangkok.
Video

Video Virtual Program Teaches Farming Skills

In a fast-changing world beset by unpredictable climate conditions, farmers cannot afford to ignore new technology. Researchers in Australia are developing an online virtual world program to share information about climate change and more sustainable farming techniques for sugar cane growers. As VOA's Zlatica Hoke reports, the idea is to create a wider support network for farmers.
Video

Video Airline Expert: Missile will Show Signature on Debris

The debris field from Malaysia Airlines Flight 17 is spread over a 21-kilometer radius in eastern Ukraine. It is expected to take investigators months to sort through the airplane pieces to learn about the missile that brought down the jetliner and who fired it. VOAs Carolyn Presutti explains how this work will be done.
Video

Video Treatment for Childhood Epilepsy Heats up Medical Marijuana Debate

In the United States, marijuana is classed as an illegal drug by the federal government. But nearly half the states have legalized it, to some degree. Proponents say some strains of marijuana might have exceptional health benefits, for treating pain or inflammation in chronic conditions such as cancer, multiple sclerosis and epilepsy. Shelley Schlender reports on a strain of medical marijuana developed in Colorado that is reputed to reduce seizures in childhood epilepsy
Video

Video Airbus Adds Metal 3D Printed Parts to New Jets

By the end of this year, European aircraft manufacturing consortium Airbus plans to deliver the first of its new, extra-wide-body passenger jets, the A350-XWB. Among other technological innovations, the new plane will also incorporate metal parts made in a 3-D printer. VOA's George Putic has more.
Video

Video AIDS Conference Welcomes Exciting Developments in HIV Treatment, Prevention

Significant strides have been made in recent years toward the treatment and prevention of HIV, the virus that causes AIDS. This year, at the International AIDS Conference, the AIDS community welcomed progress on a new pill that may prevent transmission of the deadly virus. VOA’s Anita Powell reports from Melbourne, Australia.
Video

Video IAEA: Iran Turns its Enriched Uranium Into Less Harmful Form

Iran has converted its stockpiles of enriched uranium into a less dangerous form that is more difficult to use for nuclear weapons, according to the United Nations’ Atomic Energy Agency. The move complies with an interim deal reached with Western powers on Iran's nuclear program last year, in exchange for easing of sanctions. Henry Ridgwell reports for VOA from London.

AppleAndroid