News / Asia

Thai Economy Shows Signs of Improvement After Coup

Soldiers check rice stocks at a warehouse in Ayutthaya province, north of Bangkok, Thailand, July 3, 2014.
Soldiers check rice stocks at a warehouse in Ayutthaya province, north of Bangkok, Thailand, July 3, 2014.
Ron Corben

As Thailand’s military presses on with economic reforms, the country’s economy is showing signs of recovery following months of political turmoil that led to the military coup in May.

Thailand's central bank said it expects to see signs of economic growth by the second half of 2014, as the military government presses on with reforms and restructuring.

The central bank forecast a 5.5 percent rate of growth in 2015.

During the first three months of the year, when government decision making was largely paralyzed by political turmoil, the economy contracted by 2.1 percent, compared to the previous three months.

But since ousting the civilian government May 22, surveys have indicated business and consumer confidence has revived, and the stock market is ahead.

Recovery seen

Narongchai Akrasanee, an adviser to the ruling National Committee for Peace and Order (NCPO) and a member of the central bank's monetary authority, said the economy is recovering as the government sets in place a new budget and investments.

"Many of the policies which were implemented by the last government were not able to be carried out or some of them were carried out in a very bad way so this new administration is just trying to unblock many of these things," Narongchai said.

"We're coming back. We've been in a difficult position for many years. In the eyes of lots of foreigner investors - the message I want to say is we are coming back," he added.

Business analysts said the military appears to have learned lessons from the 2006 coup, when its reform proposals stall.

The current government has moved quickly on a range of issues, including meeting outstanding payments to rice farmers, and starting massive new transportation and water management infrastructure projects.

Angus Kent, managing director of Macquarie Securities in Thailand, said the military's initial moves have been seen as positive by business, including foreign investors.

"It comes down to the reforms on a structural basis. I think the engagement from the NCPO with the chambers of commerce and other agencies have been a big positive," Kent said. "There also seems a sense of urgency to get things done, which I think from many people's experience in the room - urgency in the past is not something we're accustomed to."

Reform bureaucracy

The military has also moved to reform the bureaucracy and to reduce the influence of former leader Thaksin Shinawatra, who has lived abroad since 2008 to avoid a jail sentence for corruption.

Pavida Pananond, an associate professor at Thammasat University's business school, said the military has moved to combat corruption as well as restructure boards of state-owned enterprises.

"Another area is the intention to clean up corruption. It's a welcome move," Pavida said. "We can see now a lot of things have been addressed for example the boards of the state-owned enterprises have seen many resigned and some of the senior technocrats have also been moved to inactive posts in the office of the prime minister."

The government has set out a $75 billion infrastructure spending program on new rail links and highways. But it also put a halt to projects of the previous government that they claim may have been tainted by corruption.

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