Country Report Thailand November 2009

Outlook for 2010-11

• Thailand will remain politically unstable in 2010-11, as there will be no resolution of the country's protracted and multifaceted power struggle.
• As well as having to contend with opposition groups, the prime minister, Abhisit Vejjajiva, may struggle to retain the support of his partners in the coalition government and his patrons in the palace and the military.
• The government will support the economy through fiscal stimulus, but will face constraints owing to rising public debt. The Bank of Thailand (the central bank) will wait until there are signs of a recovery before raising interest rates.
• After contracting by an estimated 4.3% in 2009, its worst performance for ten years, real GDP will expand by 3.3% in 2010 and by 4.1% in 2011, reflecting in part the global economic recovery.
• Consumer prices will rise again in 2010 after a year of deflation in 2009, but inflation will not return to the high levels seen in 2008 owing to the weakness of the labour market, which will damp down wage increases.
• The current account will remain in surplus in 2010-11, but exports will not return to the annual growth rates of almost 20% witnessed in the pre-crisis years, when the West could be counted on to purchase Thai goods.

Monthly review

• A former prime minister, Chavalit Yongchaiyudh, has joined the Puea Thai party in a move that is widely seen as aimed at strengthening the pro-Thaksin party's capacity to influence behind-the-scenes manoeuvring.
• Allegations of corruption have surfaced in connection with state spending programmes under the Abhisit administration's flagship Bt1.4trn (US$42bn) stimulus programme, known as Thai Khem Khang (Strong Thailand).
• In late September the Administrative Court suspended 76 investment projects with a combined value of about Bt400bn (US$12bn) in a major setback to efforts to promote Thailand as an attractive investment destination.
• Underlining the fragility of the domestic economic recovery, manufacturing production fell by 1.5% in August, ending three successive months of month-on-month growth.
• In August export revenue reached a ten-month high of US$13.2bn, boosted by improving sales of high-technology products. However, total export revenue was still down by nearly 18% year on year.
• Thailand has suffered a sharp drop in inflows of foreign direct investment (FDI), and in the first seven months of 2009 net FDI flows fell by 38.5%, to US$2.9bn.

Source: Country Report

This report covers the following industry codes:
SIC Code: 60;89
NAICS Code: 52;81