IMF Cuts Thai Economic Forecast

The International Monetary Fund projects that Thailand’s economy will expand by 2.5 percent in 2015, as the Southeast Asian country contends with military rule and a turbulent economy. The IMF also cut growth from 4.0 to 3.2 percent for 2016.

The International Monetary Fund projects that Thailand’s economy will expand by 2.5 percent in 2015, as the Southeast Asian country contends with military rule and a turbulent economy. The IMF also cut growth from 4.0 to 3.2 percent for 2016.

Thailand’s economy suffers from a host of issues, but the lack of private investment is a primary concern, stemming from such factors as political instability and weak demand. Further, news circulates of King Bhumibol Adulyadej’s declining health, considered a father figure and unifying force within the nation, while the military continues to violate human rights to maintain power.

Thailand’s ruling elite recently appointed a committee to draft a new constitution, and elections will not come until 2017. Officials stated the intention of governing until elections take place, but critics believe the military is holding onto power for as long as possible.

The Beginning of Thailand’s Problems

The problem started when the military overthrew elected Prime Minister Yingluck Shinawatra in 2014 amid protests and abuse charges. Authorities imposed martial law and placed further restrictions on free speech and dissent. Though the king did not support the coup, he appointed General Prayut as national administrator, and the monarch’s de facto support of the new government legitimized the takeover. From the military’s perspective, officials believe they are maintaining social and political cohesion, and there may be a hint of validity to this argument. Some analysts note that the government maintains authority in the event of the king’s death, which would come as a shock to the nation and foster greater unrest. Regardless of the reasons, the international community has condemned the government’s actions, further isolating Thailand from the world.

Positive Solutions

Thailand is currently extending tax breaks to foreign investors to accelerate growth, notes the Wall Street Journal. Additionally, the government must expand in certain sectors, such as extending tourist destinations for travelers and establishing special zones that allow companies to hire low-pay workers to compete with Cambodia and Vietnam. On the plus side, Thailand regained its status as a top rice exporter after signing a deal with the Chinese for the import of Thai rice.

Thailand suffered an export setback as importer nations such as Nigeria underwent economic decline due to lower commodity prices. Thailand has made improvements, but the government is more concerned with power consolidation and less on strengthening a fledgling economy. With that, analysts remain hopeful that the European Union, a vital trading partner of Thailand, can exert some measure of influence over the government in changing its ways.