THAILAND’S economic outlook for 2019 is “uncertain and gloomy” due to the upcoming general election and the US-China trade war, deputy Prime Minister Somkid Jatusripitak warned yesterday.
Somkid said investors were questioning the stability of the Thai economy ahead of the election. He called it a key cause for the uncertain and pessimistic economic outlook for 2019.
“Investors are wondering which party will lead Thailand’s next government, who will be prime minister and whether current development schemes and policies will be continued,” he said.
The election uncertainty was curbing interest among both local and foreign investors, Somkid said.
With electoral laws unveiled and a ban on political activity lifted, it had been widely believed that the often-delayed election would take place on February 24.
But last week, less than two months before that date, the ruling junta again intervened, claiming post-election formalities could clash with preparations for the coronation of His Majesty the King now set for May.
It appears likely that the election will not take place next month and it remains uncertain what new date will be chosen.
The government has shown a preference for March 24, with the election results to be formally announced after the King is enthroned on May 4-6. The Election Commission would prefer March 10 if February 24 is impossible. The final say rests with the government, which critics say could time the release of the electoral royal decree to favour its preference.
“We know the election will occur within the first half of this year,” Somkid said at yesterday’s Krungthai Bank seminar on “Thailand Economic Challenges 2019”.
The other factor clouding the economic outlook is the ongoing US-China trade dispute, he said.
US President Donald Trump, he said, “has destabilised the global economy despite being able to achieve impressive domestic growth for the United States. This has a direct negative impact on export-oriented countries such as Thailand and Singapore.”
He cited a 5.2-per-cent year-on-year contraction in Thai exports in September, the first such setback the Kingdom had seen in 19 months, as evidence of the negative impact the US-China spat was having here.
Exports contribute up to 70 per cent of Thai GDP, Somkid noted.
“Furthermore, stock markets global have been at their worst since the 2008 financial crisis, largely due to the trade war. This dampens investor confidence and leads to lower consumption – another negative impact of the US-China trade war.”
Expansion plans on hold
The National Economic and Social Development Board has predicted that export growth will slow this year to a mere 4.6 per cent, down from a robust 7.2 per cent in 2018.
Bank of Thailand (BoT) senior director Don Nakornthab agreed with Somkid’s assertion that the trade war was hurting both Thai exports and investment. The BoT anticipates export growth of 4.3 per cent in 2019.
“Investors are holding off, exporters are unsure about business prospects and manufacturers are delaying plans to expand in Southeast Asia as they wait to see whether the 90-day halt [in the US-China tariff battle] will lead to settlement of the conflict,” Don said during an interview.
Despite the grim outlook, Somkid predicted that the trade war would de-escalate or be resolved by the end of the year because both Beijing and Washington were feeling negative fallout and were actively seek to end the dispute.
To stimulate growth in 2019, Somkid said the next government would need to focus on reforming the country’s economic foundation and proceed with major infrastructure projects initiated under the junta.
He urged the new government to continue promoting e-commerce for the agricultural industry, which has remained sluggish, and to improve and extend tourism infrastructure so that travellers begin visiting more places, not just the best-known attractions.