Military Leaders Try to Revive Thai Economy

Finance Minister Apisak Tantivorawong believes the economy will expand 3 percent for 2015, which aligns with an official data projection of 2.8 percent, according to The Business Times. However, the finance minister contends that a 3-percent growth rate is not enough for a developing economy such as Thailand, and he has yet to specify which sectors of the economy have begun recovering. Thailand suffers in key areas, such as exports and domestic demand.

Finance Minister Apisak Tantivorawong believes the economy will expand 3 percent for 2015, which aligns with an official data projection of 2.8 percent, according to The Business Times. However, the finance minister contends that a 3-percent growth rate is not enough for a developing economy such as Thailand, and he has yet to specify which sectors of the economy have begun recovering. Thailand suffers in key areas, such as exports and domestic demand.

Roughly, 18 months have passed since the military junta took over the country, with the economy suffering in the process. The military seized power in 2014 by overthrowing Prime Minister Yingluck Shinawatra in response to protests and civil unrest. The military promises a return to democracy, but officials show no sign of leaving anytime soon, as the government recently signed an agreement allowing the Chinese to purchase rice and rubber, including the construction of a vast railway project in the Southeast Asian country. China has bolstered relations with the new government, while other nations such as the United States remain reluctant to foster ties.

Thailand has a great deal to lose in isolating the U.S., but the recent agreement with China will enhance the domestic economy. The finance minister also plans to expand investments for 2016, launching a $2.79-billion fund by the end of 2015 to fund future infrastructure projects, and expanding different sectors of the economy. CNBC notes that the government believes three factors will drive economic growth next year: tourism, an improved world economy and a pick-up in government investment. While growth in the aforementioned areas will generate a better economy, authorities would do well to plan for the worst.

Tourism may suffer because of the country’s tarnished image. Tourism fell because of the 2014 coup, but arrival numbers started to pick up by the end of the year. Unless Thailand shows a willingness to shift back to a democratic form of governance, the government stands to lose potential visitors down the road. Another problem lies in the world economy overall. Analysts predict improvements in international markets, but others foresee a darker path ahead. The lackluster state of the world economy has already placed a tremendous strain on developing markets, and Thailand could represent one nation that bears the brunt.

Finally, government spending will constitute an important driver of growth, but it should not become a determining factor to drive prosperity. Thailand must avoid making the same mistake as fellow emerging market Ethiopia, which overindulged in public spending to finance infrastructure projects. The private sector’s involvement is paramount, and too much state interference could hamper entrepreneurship and business operations.