Thailand: Will Thailand be the first of the world’s formerly fast growing economies to de-emerge? That’s a big risk of the country’s current internal strife. The Thai economy is so heavily dependent on tourism and foreign investment that even the political losers would benefit economically from fair and peaceful elections.
The principal economic divide between the Thai government and the opposition that camped out in central Bangkok is over the emphasis in development between the city and the rural hinterland. Under the governments before 2000, development had been concentrated around Bangkok and a few resort areas, with the 1997-98 crash resulting primarily from excessive foreign currency debt related to real estate development.
From 2001 Prime Minister Thaksin Shinawatra focused development on rural areas, introducing subsidies for health and small business initiatives. His policies were successful, as Thai economic growth averaged over 5 pe r cent through 2005. Since 2005, Thailand’s economic performance has been mediocre and it has slipped down the world rankings in GDP per capita, calculated at purchasing power parity, from 96th to 120th. The current conflict, which has scared off tourist and business travel to the capital, is estimated to have cost Thailand $3 billion, about 0.5 per cent of GDP. The country’s growth rates in 2010 and 2011 are projected to be reasonable by Western standards but well below several of its East Asian neighbours. Should recent levels of conflict persist, those estimates may be optimistic.
Tourism contributes about 6 per cent of Thai GDP, more than any other Asian nation, while its principal export goods of textiles, footwear, fish products and rice all require peace and working infrastructure to succeed. Further, foreign investment at $94 billion is exceptionally important to Thailand’s economy.
The economic benefits to the Thai people of free, peaceful and internationally recognized elections as soon as possible, followed by the formation of a legitimate generally accepted government are immense, whichever party takes control. Conversely further conflict, particularly if it spread throughout the country, could destroy half a century’s economic growth. Regrettably, self-interest in Thailand – as elsewhere - does not always follow a rational path.
