Thailand Political and Economic Outlook 2011 and Beyond

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Thailand's General Outlook 2010-2011

This hub takes a look at the political and economic outlook of Thailand for 2010-2011 and beyond. The main source of this outlook is the Economist Intellgence Unit (EIU). According to the Economist Intelligence Unit report filed September 2010, the following are the highlights of Thailand's political and economic outlook for 2010-2011:

· Even though Thailand currently enjoys a relative calm following the violent end to antigovernment protests in mid-May, Thailand’s political crisis does not appear to be nearing an end.

· Recently, Thailand’s current Prime Minister managed to strengthen his hand, but he does not appear willing to risk calling an early election.

· The government will continue to run a budget deficit for the next two years; the shortfall will average 2.8% of GDP. The Bank of Thailand (BOT, the central bank) will tighten monetary policy.

· Owing to the strong performance of the economy in the first two quarters of 2010, the Economist Intelligence Unit has revised up its GDP growth forecast for the year as a whole from 4.1% to 7%. Growth will moderate to 4% in 2011.

· Consumer prices will rise in 2010 after a year of deflation in 2009. However, inflation will not accelerate rapidly, partly because of the strength of the baht, which has appreciated sharply against the US dollar in recent months.

· Thailand.s exporters are enjoying a rapid increase in revenue as a result of the recovery of the global economy, and the current account will remain in surplus in 2010-11.

Fun Facts about Thailand

Thailand is located in Southeast Asia and is part of the Association of Southeast Asian Nations (ASEAN). It is bordered by Cambodia on the east; Laos on the east and northeast; Burma (Myanmar) on the northwest and west; and Malaysia on the south. It has a long peninsula on the south which is nearly surrounded by the Indian Ocean on the southwest and the Gulf of Thailand on the southeast.

According to the CIA's World Fact Book, Thailand has a population of 65 million citizens, 85% of which are ethnic Thai.

Thailand's Political Outlook for 2011 and Beyond

Without a doubt, Thailand's political situation is a mess and Thailand's political outlook for 2011 and beyond does not look pretty.

For just over four years Thailand has endured an intensely adverse domestic political climate. For most of those four years there has been political turmoil between various factions; most notably between the political parties backed up by citizens who are poor and come from rural settings and other parties representing the more wealthy and burgeoning middle class from urban areas.Finally in May 2010, Thailand's domestic political climate became so out of control, the current prime minister ordered a severe crackdown on the opposition that resulted in a relative calm.

However, accordingng to the Economist Intelligence Unit, Thailand's political problems do not appear to be over and Thailand's political outlook for 2011 does not seem to be a positive one.

Current prime minister Abhisit Vejjajiva does seem to be strengthening his hand and gaining more control over the governmental affairs of the country. He has done so by working with a military group to crack down on the  opposition through a campaign of repression. Even though Abhisit is getting stronger and has the powerful military behind him, he is not yet ready to call for early elections. EIU reports that the current situation does not lend itself to elections because all opposition parties are unlikely to support the outcome no matter which party receives the most votes.

Another potential problem that could potentially ad even further uncertainty and struggle to Thailand's political outlook for 2011 and beyond is the health condition of the very popular reigning monarch. The current monarch has long been seen as a stabilizing force in Thailand's domestic affairs, but has not been seen in nearly a year. The king is in his eighties and has been in a state of declining health for some time. Observers are not sure what will happen to the monarchy if and when the king passes away.

Thailand's Economic Outlook 2011 and Beyond

According to the forecast of the Economist Intelligence Unit, GDP growth in the Thai economy will come in around 4% in 2011, with political uncertainty continuing to undermine consumer and business confidence. However, as in the first half of 2010, although political risks could hinder future investment, business operations in Thailand (particularly in the country’s industrial zones) are likely to be generally unaffected in any direct way by political unrest. Thus, as long as global demand continues to grow, Thailand’s export-oriented manufacturers should continue to reap the benefits.

It should be noted that EIU consider a "double-dip" recession in the world economy to be unlikely, and believe that the current softening of global growth is best understood as a natural adjustment following a period of unsustainably rapid stimulus-driven expansion since mid-2009.

Political difficulties are nevertheless likely to continue in Thailand to complicate the public sector’s plans for large-scale investment. Furthermore, although the tourism sector is already showing signs of healthy recovery, further bouts of violence in the country would stall this process.

In international trade the Economist Intelligence Unit forecasts that Thailand’s current trade account will remain in the black, but the surplus will decline to the equivalent of 4.3% of GDP on average in 2010-11, from 7.7% in 2009 when merchandise imports contracted even more sharply than exports.

 

Although the recovery in global demand is slackening, EIU foresees Thailand’s exporters will continue to show growth in revenue and will maintain their competitiveness in a number sectors, most notably electronics and vehicles. The import bill will also rise in 2010-11 as growth in consumption and investment resumes. The increase in imports will be particularly strong this year, reflecting the steep drop recorded last year.

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Comments 12 comments

jeanie.stecher profile image

jeanie.stecher 6 years ago from Seattle

Thailand is one of the high rising nation which Asia has to offer. From Political depression to good future economic outlook in the near future.


LillyGrillzit profile image

LillyGrillzit 6 years ago from The River Valley, Arkansas

This is a very informative Hub. You are so intelligent and you write on such an interesting variety of subjects. Thank you for sharing.


ecoggins profile image

ecoggins 6 years ago from Corona, California Author

jeanie - Thailand has for many years been a shining star in Southeast Asia in terms of political stability and economic growth. Yet, now it all seems threatened. Former Prime Minister Thaksin Shinawatra made some tactical mistakes in the early part of the decade that brought chaos to Thailand's political scene. The turmoil has not yet affected Thailand's economy as much as one would expect, but any further escalation of unrest and violence will sooner or later spill over into the economy as foreign nations become less confident. One hopes that peace and political stability can be restored for the long-term.

Beyond the political unrest, Thailand has a few other problems that must be rectified including being a major player in human trafficking and the sex trade. Unfortunately, huge throngs of Western men make their way to Thailand every year to visit their red light districts.


A Blight 6 years ago

There is a myth that the sex trade in Thailand is fueled by western visitors. There certainly are plenty of Westerners here who take advantage of the sex industry but unfortunately, it would exist without them. If you visit even the most remote village in Isan you will find a karaoke bar catering to locals- often the girls are from Laos.


ecoggins profile image

ecoggins 6 years ago from Corona, California Author

A Blight, yes I know you are right. The sex industry in Thailand and other Southeast Asian countries would exist without western men. I lived in cambodia for six years where the police and military both were the most frequent offenders.


Mike 5 years ago

According to foreign NGOs who work in the field, 80% of prostitution in Thailand is for Thai men. Another 10% is for other Asians (Chinese, Malay, Korean). So when you see all the hostess bars aimed at western men, you are only seeing the tip of the iceberg.

Far better to work at one of these bars than at a brothel servicing Thai men.


Tangmo 5 years ago

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nickupton profile image

nickupton 5 years ago from Bangkok

Former Prime Minister Thaksin has promised, through his political puppet party, to give out credit cards to poor farmers and taxi drivers.

Giving credit to millions of people who cannot afford to make the payments will result in economic catastrophe as it has in many other countries. Hopefully they will not win and be able to implement this ridiculous bribe.


ecoggins profile image

ecoggins 5 years ago from Corona, California Author

nickupton, thank you for your comment. I agree with you that would be disastrous. such is the politics of southeast asia.


IndoVillas 5 years ago

I hope for better things to come in Thailand this year.


mukesh bhagwan katakdhond 5 years ago

i am student of hospitality management . i am doing the project on thailand .while doing these project it was a good experence . i love thailand.


noreen 4 years ago

i am student of M.sc and from pakistan.... a project is given to me on Thailand country so i need to know the current situation of thailand can any1 help me plzz ...

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