Looking good in a bad year for the rest of the world
Thailand has had a difficult two decades. Since late 2004, it has stumbled through two military coups, multiple elections and prolonged political disruptions. With the passing of the long-reigning King Bhumibol, a familiar and comforting authority figure is no longer available to stabilise the system as he frequently and effectively did. In the meantime, competitors such as Vietnam are catching up with Thailand. Its population is ageing and the workforce is not growing as before. Economic growth has slowed to the point where some now believe that Thailand is stuck in a middle-income trap.
Our take is somewhat more hopeful. Cyclically, Thailand is poised to rebound smartly from the damaging impact of covid on its large tourism sector. Its fundamentals are sufficiently robust to give it resilience against the financial and economic turbulence that an increasingly uncertain global environment could unleash. The longerterm outlook for the country is where there is a bigger question mark. There are some promising signs that Thailand’s impressive technocrats are coming to grips with the structural shortcomings of its economy that depress its potential growth. But whether Thailand can indeed move beyond these structural handicaps hinges on the political outlook. The coming elections may create the opportunity for the political class to work towards a new consensus that could help stabilise the country.
