In the wake of Thailand’s coup in 2014, Prime Minister Prayuth Chan-o-cha quickly disbursed over the over US$3 billion owed to farmers from the ousted government’s politically hamstrung rice price subsidy scheme. It appeared that the country’s new military rulers had the will and means to break the bureaucratic inertia that had stalled fiscal spending under successive elected administrations.
One year later, however, it is business as usual. While the government has pledged the highest proportion of investment in seven years in its newest budget plan, Prayuth’s economic lieutenants chose to rake a rigid policy approach, narrowly focusing on big ticket infrastructure projects, such as ambitious high-speed rail lines, while dogmatically avoiding any grassroots outlays that could help in the short-term.
The military government’s hard focus on overhauling politics and squashing dissent , it seems, has come at the expense of economic reform.
For a country that was once a powerhouse among developing nations, the recent decline of Thailand’s economy is telling. Exports have collapsed, consumer confidence has been eroded and manufacturing output has fallen every month but one since March 2013.
Thailand’s financial markets don’t portray much hope either. The markets had to cope with large capital outflows, corporate debt is at unsustainable heights and the Thai Baht is the one of the worst performers among major currencies in Asia.
“Growth prospects look very subdued compared to other countries in the region, and in the event of a serious political shock, the country could quickly spiral into recession,” said Sarah Fowler, a London-based analyst at Oxford Economics.
“The political situation will inhibit efforts to improve the working of the economy.” She added, “The government is unlikely to resolve structural economic issues that include an overreliance on agricultural exports and a failure to pursue policies that encourage manufacturing companies to move up the value-added chain.”
As a consequence of the mounting upheaval, Thailand’s government is under increasing pressure to bolster the economy, especially after the finance ministry this week cut its 2015 forecasts for exports and gross domestic product growth for the third time this year.
Even the business class, important to Prime Minister Prayuth Chan-o-cha’s administration, has become increasingly concerned. Business leaders and associations have urged Prayuth to shuffle his economic team and shift policy course — half of the current cabinet is composed of military personnel with little experience.
Until now, Prayuth has resisted those calls on the grounds that cabinet ministers should have the opportunity of a full year in office to prove their mettle. Only recently, has Prime Minister Prayuth Chan-Ocha come out and stated that a reshuffle of the cabinet might have to be considered. Yet, on Monday, Prayuth also stated that he won’t be pressured to make changes “just because somebody is at fault or because of social pressure.”
Ambika Ahuja, a London-based analyst with political-risk adviser Eurasia Group, believes, a reshuffle would likely shore up his support among the middle class, though it “will be less about actual economic performance and more to do with public perception and policy coordination at the civil service level.”
The junta seized power with a promise to bridge a decade of political schism, end corruption, and bring happiness. Yet, while Prayuth promised that he would return the nation to civil rule and economic strength, both seem like distant dreams at this point. No dissent and the constitution is in place and there is no firm date yet for an election. The economy remains in awful shape.