What Do Thailand’s New Economic Numbers Say About Its Political Future?

Although the neverending wait for Thailand’s return to democratic rule since the military seized power back in May 2014 shows few signs of ending anytime soon, recent figures do suggest that the country’s economy is showing indications of improving.

While the latest data released did admittedly fall slightly below expectations amid a drop in state spending, gross domestic product grew by 4 percent, year-on-year, in the fourth quarter, and the outlook for 2018 appears to be quite bright.

It was the best result in five years, with GDP up by an inflation-adjusted 3.9 percent in 2017, from 3.3 percent in the previous calendar year.

That should please Prime Minister Prayut Chan-o-cha, whose military government has faced criticism for its handling of the economy since it seized power in the coup. Prayut has also consistently delayed promised elections and a return to democracy.

Much of the growth was led by tourism and manufacturing, according to the Office of the National Economic and Social Development Board. Manufacturing production climbed 3 percent during the quarter on the back of higher exports, while the nonagricultural sector grew 4.6 percent, with the number of foreign tourists up by 19.5 percent over the same period a year ago.

However, consumption, alongside private investment, fell behind, which analysts said was due to excess capacity in industry and increased household debt.

Supporting the GDP data was the release of annual export figures, which beat forecasts and also put in their best performance in five years, gaining on improved global demand for cars, computers, and rubber products.

Exports leapt 17.6 percent year-on-year in January, according to the commerce ministry, following on from a rise of 8.6 percent in December.

The Thai economy is now expected to maintain the current clip throughout 2018, with the government raising its export growth target to 6.8 percent for the current year from 5 percent in 2017.

And those figures were warmly welcomed by Bank of Thailand governor Veerathai Santiprabhob, who told a business seminar that Thailand’s economic fundamentals remained strong and had the ability to withstand volatility in capital movements.

“The Thai economy is strong and can withstand global volatility to some extent,” he said. “We have low foreign debt, very good foreign currency liquidity, high foreign reserves, and a strong banking system.”

These figures should ideally encourage Prayut to begin his country’s transition back to a democracy through a national election, which he has promised since ousting Prime Minister Yingluck Shinawatra, who was convicted of abuse of power and fled into exile.

But whether or not better economic prospects can translate into a smoother political road for the junta and Thailand more generally is unclear. The opposition to the junta has been growing, with elections that had been promised for 2015 pushed back to 2016, then 2017, then 2018, and now potentially out to 2019.

Prayut has banned protests, but that did not stop 400 people from gathering in February in Bangkok to urge the government not to delay any further. Such protests tend to generate greater anxiety over a potential government crackdown that could in turn lead to violence.

The ruling junta is also far from the only variable here. Also gearing up for an election are the exiled former prime ministers, Thaksin Shinawatra and his sister Yingluck, who have urged opposition unity from abroad based on expectations that the November poll will go ahead.

Both were seen together at a Singapore hotel earlier this week holding court with a group of men who were unidentified. That followed a weekend meeting in Hong Kong by members of their Pheu Thai Party.

A victory for the Pheu Thai Party could raise the prospect of the return of the Shinawatras and their allies to Thai politics, although that remains unlikely given the junta’s determination to prevent exactly that outcome. Whether Prayut delivers on his latest promise is difficult to gauge; past form is not encouraging. But, if anything, the latest government numbers mean that economic stability should not be an excuse to delay again.