Thailand could face a “lost year” if the country delays the process of forming a new government until May next year, according to Assoc. Prof. Dr. Thanavath Phonvichai, the president of the University of the Thai Chamber of Commerce (UTCC).
“Lost year” is a term coined to refer to a long period of sluggish economic growth and declining investment.
Dr. Thanawat said that the time being spent on forming a new government is affecting the economy, especially for next year. If the new government is formed in August, the country should have a new cabinet and the government policy statement by September.
He explained that, according to the party’s budget policy, budgeting under the leadership of Pheu Thai can be finalised sooner than under Move Forward, which has a zero-based budgeting policy, which requires all expenses to be justified and approved in each new budget period.
Waiting for another 10 months to form a new government will gravely affect the economy. People’s confidence in the state of the economy will be lost. When investors have no idea what the country’s policy will be for that long, everything pauses and the economy slows down more and more.
Another challenge the country is facing is drought, caused by the El Niño weather phenomenon. If the country does not prepare enough and is not proactive, the agricultural sector will be badly affected. Farmers will get into deeper debt and the export sector will not recover, due to the lack of government support.
Dr. Thanawat also said that the UTCC expects Thailand’s economy this year to expand by 3.1-3.5%. The main driver is tourism, with the country expected to welcome at least 25 million visitors by the end of the year. If there are more protests and rallies, however, that number could dwindle.
