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Political Uncertainty Plunging Thailand Into Stagnation
World Economy

Political Uncertainty Plunging Thailand Into Stagnation

Thailand’s stagnating economy is unlikely to get much of a boost from a referendum Sunday on a new constitution proposed by the military government, which took power in a 2014 coup. A “yes” vote could, however, tamp down some of the uncertainty that has plagued the country over the past half-decade of instability.
Government spending and tourism are keeping growth afloat despite weak exports and plunging foreign investment. The World Bank forecasts that the economy will expand at a 2.5% annual rate this year, down from 2.8% in 2015, AP reported.
At $395.3 billion, Thailand is Southeast Asia’s second biggest economy after Indonesia. The gap between rich city dwellers and the rural poor is wide, and while extreme poverty has been almost eliminated, one in 10 Thais remain below the official poverty line of $6.20 a day. In the past year, drought and falling global prices have hurt farm incomes.
Thailand is not part of the US-led Pacific Rim trade pact known as the TPP, or Trans-Pacific Partnership. But some in Thailand are lobbying for it to join, hoping that participation would help boost slumping exports and give the country an edge in a huge potential common market.
Foreign investment plunged by 90% in 2015 from the year before to 106 billion baht ($3 billion), after businesses rushed in 2014 to beat implementation of new rules that cut back on tax incentives for foreign businesses.
A bombing of a Bangkok shrine in August 2015 that killed 20 people put a dent in Thailand’s economically crucial tourism industry, but the country still received nearly 30 million foreign visitors for the year, as arrivals from China swelled.
Thailand’s currency dipped to a six-year low against the dollar last year as foreign investors dumped stocks, and remains at about 35 baht to the US dollar, on a par with 2009. After slashing interest rates twice last year, the central bank held back last week on further cuts that might push the baht still lower, to preserve “policy space” in case conditions worsen.
Meanwhile, Japanese enterprises have shown high interest in investing more in Thailand’s “digital economy” and foresee the government-supported industrial clusters as engines for strong economic growth, according to Commerce Minister Apiradi Tantraporn.
According to the latest survey by the Japanese Chamber of Commerce in Bangkok, 33% of Japanese enterprises in Thailand plan to expand their investment in the country. Half of them said they would continue to use Thailand as a major manufacturing base.

Political Uncertainty Plunging Thailand Into Stagnation

Thailand’s stagnating economy is unlikely to get much of a boost from a referendum Sunday on a new constitution proposed by the military government, which took power in a 2014 coup. A “yes” vote could, however, tamp down some of the uncertainty that has plagued the country over the past half-decade of instability.
Government spending and tourism are keeping growth afloat despite weak exports and plunging foreign investment. The World Bank forecasts that the economy will expand at a 2.5% annual rate this year, down from 2.8% in 2015, AP reported.
At $395.3 billion, Thailand is Southeast Asia’s second biggest economy after Indonesia. The gap between rich city dwellers and the rural poor is wide, and while extreme poverty has been almost eliminated, one in 10 Thais remain below the official poverty line of $6.20 a day. In the past year, drought and falling global prices have hurt farm incomes.
Thailand is not part of the US-led Pacific Rim trade pact known as the TPP, or Trans-Pacific Partnership. But some in Thailand are lobbying for it to join, hoping that participation would help boost slumping exports and give the country an edge in a huge potential common market.
Foreign investment plunged by 90% in 2015 from the year before to 106 billion baht ($3 billion), after businesses rushed in 2014 to beat implementation of new rules that cut back on tax incentives for foreign businesses.
A bombing of a Bangkok shrine in August 2015 that killed 20 people put a dent in Thailand’s economically crucial tourism industry, but the country still received nearly 30 million foreign visitors for the year, as arrivals from China swelled.
Thailand’s currency dipped to a six-year low against the dollar last year as foreign investors dumped stocks, and remains at about 35 baht to the US dollar, on a par with 2009. After slashing interest rates twice last year, the central bank held back last week on further cuts that might push the baht still lower, to preserve “policy space” in case conditions worsen.
Meanwhile, Japanese enterprises have shown high interest in investing more in Thailand’s “digital economy” and foresee the government-supported industrial clusters as engines for strong economic growth, according to Commerce Minister Apiradi Tantraporn.
According to the latest survey by the Japanese Chamber of Commerce in Bangkok, 33% of Japanese enterprises in Thailand plan to expand their investment in the country. Half of them said they would continue to use Thailand as a major manufacturing base.

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