Transcript Thailand`s economy: weak today but better tomorrow

Light at the end of the tunnel?
A brighter future for Thailand in 2010
British Chamber of Commerce in Thailand
American Chamber of Commerce
Friday 30 October 2009
Amari Orchid Resort, Pattaya
Christopher F. Bruton
Dataconsult Ltd,
Bangkok, Thailand
Light at the end of the tunnel?
A brighter future for Thailand in 2010
How does Thailand rate in the Region?
Thailand’s politics: the weak link in the chain?
Thailand’s economy: weak today but better tomorrow ?
1. How important is Thailand in ASEAN ?
GDP US$ billion (2007)
Sources: World Bank and UNDP
Population millions (2007)
2. World Governance indicators
Overall score (max 600)
Political stability (max 100)
525
Sources: World Bank: Aggregate Governance Indicators 2009
Note: Overall score divided into six categories (accountability, political, stability, government effectiveness, regulatory
quality rule of law, corruption control)
3. Decline in governance factors in Thailand
Scores
(out of 100)
80
70
Gov’t effectiveness
60
50
40
30
Regulatory Quality
Rule of law
Corruption control
Accountability
20
10
0
Sources: World Bank: Aggregate Governance Indicators 2009
Political stability
4. Human development indicators
(ranking in 181countries)
Sources: UNDP Human Development Index 2009
5. World Competitiveness rankings
(2009 ranking in 134 countries)
Sources: World Economic Forum: Global Competitiveness Report (134 countries) 2009/10
Note: (1) Laos and Myanmar not evalued
(2) Thailand ranked 28 in 2006, 36 in 2009
6. Ease of doing business ranking 2010
(ranking in 183 countries)
Sources: World Bank: Doing Business Series, 2009/2010
Note: Thailand improved from 20 in 2006 to 12 at present
7. How does Thailand rate in the Region?
• Thailand accounts for 20% of ASEAN GDP, 12% of ASEAN
population
• Governance: 4th rank in ASEAN
• Declining governance ratings, especially political stability
• Decline in competitiveness: 28th in 2006. 36th in 2009
• Ease of doing business: 12th rank: world leader
Light at the end of the tunnel?
A brighter future for Thailand in 2010
How does Thailand rate in the Region?
Thailand’s politics: the weak link in the chain?
Thailand’s economy: weak today but better tomorrow ?
8. Politics: weak link in the chain
Long-term issues
• Political / economic power moving away from Bangkok
 demographics; industrial relocation; devolution
 North / Northeast rising politically
 Eastern Seaboard rising economically
• Decline in political institutions, rise of “direct action”
• Authoritarianism versus populism: which is morally best, but
which works better?
• Coalition legitimacy makes 2010 election inevitable
• Who will win?
 demography plays its hand
 risk of coalition components shifting to other side
• Could the democratic process be short-circuited yet again?
Light at the end of the tunnel?
A brighter future for Thailand in 2010
How does Thailand rate in the Region?
Thailand’s politics: the weak link in the chain?
Thailand’s economy: weak today but better tomorrow ?
9. Thailand’s economy: weak today but better tomorrow?
Quarterly GDP performance and outlook
Sources: Q3/08-Q2/09: NESDB
Q3/09 to Q2/10 IMA forecasts
Annual GDP Performance and outlook
10. Political trends and economic consequences:
Case of the Stock Exchange of Thailand: October 2009 suggests
economic forces predominate
Note:
1. SET Index reached 2009 high points in October
2. Price correction was natural, perhaps inevitable
27 Oct
28 Oct
29 Oct
26 Oct
12 Oct
13 Oct
14 Oct
15 Oct
16 Oct
19 Oct
20 Oct
21 Oct
22 Oct
5 Oct
6 Oct
7 Oct
8 Oct
9 Oct
2 Oct
1 Oct
Sep 09
Aug 09
Jul 09
Jun 09
May 09
Apr 09
Mar 09
Feb 09
Jan 09
Dec 08
Dec 07
Dec 06
Dec 05
(April 1975 = 100)
11. Tend of the economy in 2009/2010
• Consumption and investment
 Weak 2008, negative 2009, recovery 2010
 Government stimulus plan critical: will it happen?
• External sector
 Strong trade in 2008, severe fall-off in 2009,
 Recovery in 2010 depends on World trade flow restoration
• Major issues
 Instability factor
 Reorienting economy from external to domestic
 Environment versus investment
 Success of stimulus package
 Competitiveness (strengthening Baht)
 Rising public debt (38% of GDP in 2008, over 60% by 2012)
12. Key conclusions
• Thailand fundamentally strong;
• Search for stability under “Thai road to democracy”
challenging to achieve;
• “Business as usual” attitude traditional in Thailand: we
have seen it all before;
• But recovery in 2010 at best gradual: hard to counter world
trends;
• Every crisis offers opportunities: M&A, asset
acquisitions, liberaltisation;
• Risk management preparedness plans necessary to avert
impact of crisis