By Daniel Gallucci, Asean Confidential
How badly has Thailand’s economy been affected by a decade of political turmoil? A projection of what GDP growth might have been in the absence of messy politics indicates that at the macroeconomic level, Thailand has not been nearly as able to shrug off external shocks as the oft-quoted moniker “Teflon Thailand” might suggest.
Between the first quarter of 2001, when former premier Thaksin Shinawatra and his Thai Rak Thai party won their first election, and the fourth quarter of 2005, just before significant protests against Thaksin began, the Thai economy expanded by 31.9 per cent in total, equal to an average growth rate of 1.5 per cent quarter on quarter and 6.0 per cent year on year. In the eight and a half years since, the economy has grown by just 21.1 per cent in total, at an average rate of 0.6 quarter on quarter and 2.3 per cent year on year. Read more
By Dan Gallucci, Asean Confidential
General Prayuth Chan-ocha, leader of the May 22 coup d’état that returned Thailand yet again to a state of military rule, has repeatedly emphasised the country’s need for a “return to happiness” following months of political chaos. He has even released a song about it.
The coup-makers appear to have so far accomplished this task according to some yardsticks: consumer confidence is up nationwide (see chart), and in Bangkok the streets are safer and traffic is no longer disrupted by protests. Many Thais approve both of the coup itself and the job the generals have done managing the country since. Read more
Ben Simpfendorfer, Silk Road Associates
Walk along the chilled meat aisle in Wellcome, a Hong Kong supermarket chain, and Betagro’s pork products stand out. The company is one of Thailand’s largest poultry and pork producers exporting nearly $700m annually with the large share shipped to Europe and Japan, where buyers are attracted by not just the product’s price, but also its quality.
Indeed, it’s the latter that makes Betagro’s pork products stand out from its competitors in Hong Kong. Each package has a QR code that allows customers to trace the product’s origins right back to the farm-gate, a major attraction in a market where food health safety concerns are an increasingly big driver of consumer preferences, local and foreign. Read more
Dan Gallucci, Asean Confidential
Whatever progress toward a stable democracy Thailand has lost with the military’s ouster of the elected Puea Thai government, an economic analysis of the country’s latest coup must confront the following facts. First, the Yingluck Shinawatra administration had severely mismanaged the Thai economy even before the political crisis began. Second, the economy has been far more impacted by this turmoil than headline numbers currently reveal.
It will be difficult for any government the junta installs to do worse. Read more
By Gavin Bowring, Asean Confidential
It might seem odd to think of Cambodia as a haven of political stability. Labour unrest in Cambodia’s garment factories turned violent in January this year, while the country’s opposition party, the Cambodia National Rescue Party (CNRP), has boycotted Parliament for six straight months in protest of last year’s “flawed” general elections.
Nevertheless, in the space of a week, Cambodia has seen thousands of Chinese residents in Vietnam fleeing across the border as a result of escalating tension between China and its southern neighbour, Vietnam. Meanwhile, the recent military coup in Thailand led to implicit suggestions by the lawyer of former prime minister Thaksin Shinawatra that Cambodia might be willing to host his “government-in-exile”, though these suggestions have been denied by Cambodian Prime Minister Hun Sen. Read more
By Adithep Vanabriksha, Aberdeen New Thai Investment Trust
Thailand, the famed ‘Land of Smiles’, has been a lot less joyful during months of anti-government street protests in Bangkok.
Violent demonstrations, legal challenges, a botched election and the fallout from a misguided policy of rice subsidies that the government is struggling to honour have rocked the administration of Yingluck Shinawatra, the prime minister. Read more
Has the Bank of Thailand blinked in the face of the country’s escalating protests? In a surprise move, the bank cut its policy interest rate on Wednesday by 25 basis points to 2.25 per cent a year, highlighting weaker than expected growth in the third quarter and the “ongoing political situation”.
Indeed, growth is expected to be weaker towards the end of 2013 and through 2014. But has the bank made the wrong call? Read more
Thailand’s GDP figures were a bit of a disappointment on Monday, showing growth in Q3 of just 2.7 per cent.
The main culprit was domestic demand, which fell 1.2 per cent year on year. That’s a particular blow as local consumption has up to now been one of the most consistent drivers of growth: since 2007, domestic demand has fallen only in the exceptional circumstances of the global financial crisis of 2008-09 and Thailand’s huge floods of 2001. So what’s the problem now? Read more
Thailand’s central bank held rates on Wednesday at 2.5 per cent, despite concerns over both the global economy and a slowdown in domestic activity.
Having dropped rates in four 25 basis points steps since late 2011, is that it for the cutting cycle? Read more
It was one of those moments that investors and analysts in Thailand have been waiting for: insight into the government’s massive Bt2,000bn ($68bn) infrastructure spending plan.
But rather than a big press conference, it came in a little-publicised lunch talk by Chadchart Sittipunt, Thailand’s transport minister, to members of the Japan-Thailand Association last Friday. Read more
By any comparison, 2012 was a bumper year for new issues on the Thai stock market. Companies and property funds listing on Thailand’s bourse raised $1.8bn – the most since 2002.
With stock prices strong, investors can expect a lot more in 2013 – the Stock Exchange of Thailand forecasts that the market capitalisation of new listings will climb from Bt116bn ($4.03bn) in 2012 to Bt120bn ($4.2bn) Read more
The yen shock has sent shudders around Japan’s Asian exporter rivals, not least Thailand.
The baht has soared spreading consternation among exporters. But even in a country where exports are over 75 per cent of GDP, the picture isn’t as simple as it seems. First, currency isn’t the only determinant of export competitiveness in a world of complex trade flows. And second, there could be benefits to Thailand in the expected outflow of Japanese money seeking higher yields in emerging markets. Read more
Where's my iPad?
A Thai government deal to supply 1.8m school children with tablet computers, the largest contract of its kind in the world, could tempt about 10 manufacturers to bid.
At just under $100 a tablet, the margins will be wafer-thin. But there will be considerable kudos for the winners. In a fiercely-competitive market that will do no harm. Read more
What rebound? After the catastrophic floods of late 2011, Thailand should by now be hoping for something closer to normality in terms of trade.
Instead, it’s got the biggest trade deficit on record in January – a whopping 5.5bn, the largest since 1991. What’s going on? Read more
Thailand has done it again – exceeding all expectations, even those of its own central bank. The government said on Monday that GDP grew 3.6 per cent in the fourth quarter of 2012, up 18.9 per cent on the same period in 2011 and bringing full-year growth to 6.6 per cent. The fourth quarter figure is the highest since records began in 1994 and was received as excellent news for the Kingdom – but has also fuelled concerns that a bubble is in the making. Read more