Thailand’s economics boss quoted a respected thinker and Prime Minister of Thailand from the 1970s Kukrit Pramoj who said that too much talk or commentary can make good things look bad. The Deputy PM said that although exports were expected to grow, he had fingers crossed that they would not fall further.

Thailand’s Deputy Prime Minister Somkid Jatusripitak has warned that ongoing public speculation about the state of the Thai economy risks undermining confidence. The economics czar was commenting on figures showing a lower growth forecast for 2019 but said he is ready to brief parliament on the state of the economy during an expected censure motion debate next month.

The Deputy Prime Minister Somkid Jatusripitak quoted a former PM from the 1970s on this week when he warned that public commentary on the state of the economy had the power to undermine confidence and make what is essentially good also look bad.

Thailand’s Deputy Prime Minister with special responsibility for economic affairs has warned about heightened discussion and speculation on the state of the Thai economy by the public. He suggests that there is a danger that commentary on the subject could further erode confidence and public sentiment.

Ready for a parliamentary debate on a motion to censure the government

At the same time, Mr Somkid has underlined that he is ready to brief parliament on the state of the Thai economy in December when a censure motion is to be brought against the government by the opposition. The deterioration in the country’s economic performance and difficulties being experienced by the less well off and small business are certain to be key issues during that debate.

Comments come as a top Thai economic body adjusted growth rate from 2019 to 2.6%

The comments by Deputy PM Somkid comes as the National Economic and Social Economic Development Council reported on Monday that the growth rate for the third quarter was 2.4% which is below the revised 3% figure being targeted by the government in a year in which it has been left reeling with not only slower export growth but an export contraction.

The figures published by the economic body on Monday predicted that exports will contract by 2% this year when the final tallies are made.

Thailand’s economic fundamentals are strong but there are key issues and problems

It should be borne in mind that the problems associated with the Thai economy are specific and relate to individual areas and issues.

There is no denying the point made this week by Deputy PM Somkid and the Thai central bank that the Thai economy in terms of the economic fundamentals is sound.

A strong Thai baht, banking sector, government borrowing lower than international levels and a growing current account surplus all point to this.

High household debt and difficulties for small business among the top concerns right now

The economic problems facing Thailand, however, are nevertheless real.

They include a high level of household debt which is growing, ongoing difficulties finding a market for Thai exports with an appreciating currency and an increasingly difficult business environment for the small business sector. This part of the economy has been buffeted by reined in domestic consumption, a contraction in bank loans and support.

Suan Dusit poll shows that taxes on staple purchases are a source of concern for over 65% of the public

On Sunday, the Thai Examiner reported on Suan Dusit poll which showed that nearly two-thirds of Thai people were concerned at increased government taxes on staple products.

The issue emerged as the leading matter of concern for those surveyed. 

It must always be remembered that Thailand has a large grey economy. The huge fall in consumer confidence since February as measured by the Thai Chamber of Commerce from 82 points in February to 70.7 in October shows the reality for most Thai people who were impacted quickly as exports contracted this year and whose living expenses are so meagre that indirect taxes on shopping products makes an appreciable difference.

This illustrates the real disconnect between economic fundamentals and the economy as it is experienced by a large section of the population.

Deputy PM accepted that the Thai economy had been negatively impacted in 2019 by external factors

Deputy Somkid was reported on Tuesday as accepting that the economy had been impacted by a slowdown in 2019 caused by the impact on exports of external actors interpreted as meaning the global trade war and the appreciating value of the Thai baht.

He did, however, insist on highlighting that the economy was still moving forward. The government is also banking on an improved performance in the last quarter which is quite normal for Thailand. 

Exports expected to grow again but Deputy PM is keeping his ‘fingers crossed’

Mr Somkid said that exports were expected to pick up again but appeared more ambiguous when he told reporters that he was keeping his fingers crossed that the country’s export would not contract further.

The Deputy PM mentioned a higher VAT intake for October and there is also confidence that public investment has risen.

The economy is also entering the high season for tourism and end of year shopping which has become more pronounced in Thailand in recent years.

Cut in property taxes to boost property sector

The government has also cut the property transfer fee from 2% to 0.01% and a mortgage fee from 1% to 0.01% in a targeted move to boost the property sector impacted by central bank lending curbs. This move is already in effect but limited to property valued at under ฿3 million. 

The move will benefit younger couples and families getting on to the property ladder which will, in turn, see a growth in products and services associated with the housing industry.

One key growth area in the third quarter has been the Thai services sector across the board.

Latest growth figures are acceptable 

The Deputy PM described the figures outlined by the National Economic and Social Development Council which this week revised the growth figure for 2019 to 2.6% as acceptable given the external circumstances facing Thailand which has also impacted other countries.

Warned of a danger of undermining confidence

However, the economic czar who also served under Thaksin Shinawatra reiterated the danger of undermining confidence in the economy.

Mr Somkid pointed out that world business leaders were now regularly visiting Thailand to invest and set up in the country.

In the last week, he recalled that this includes several US tech giants which would be a boost for Thailand’s 4.0 agenda.

The danger of making good things look bad

‘I don’t think the issue is something one should complain about. The most important thing is confidence. If we keep talking about it, as the late former prime minister MR Kukrit Pramoj put it, this will make good things look bad, which will have wide repercussions,’ Mr Somkid told reporters.

Former PM, academic, thinker and actor

Mom Rajawongse Kukrit Pramoj was a former Thai Prime Minister from the 1970s who was also a member of Thailand’s extended Royal Family.

As well as being a politician, respected academic, writer and thinker, he also found time for acting.

He appeared as the prime minister of a fictional country of ‘Sarkham’ in a 1963 movie starring Marlon Brando. The movie was titled The Ugly American

Further reading:

Conflicting messages on the Thai economy as two opinion polls paint different pictures of what is going on

Banks report strong profits in the 3rd quarter pointing to a healthy underlying economy and bank sector

Economy not yet in crisis says central bank governor as ministers meet to discuss trade and tourism