After voters across Thailand headed to the polls recently, there are now concerns that uncertainty over the result could end up causing significant damage to the Thai economy. Thailand’s economy has recovered slowly but steadily since the 2014 military coup, yet it remains in a fragile state. With all the votes in, reports of widespread irregularities in the process and still no clarity on who the winner is, the eyes of the Asian markets are firmly focused on Thailand.
In the run-up to last Sunday’s election, Thailand’s military junta had been hopeful that their leader, Prayuth Chan-Ocha, would be able to hold onto power. However, unofficial results since the vote indicated that the party linked to Thailand’s was on course to take the most seats. A week on from election day and we are still awaiting official results.
There are concerns that any prolonged power struggle could ultimately prove disastrous for an economic recovery that, until now, had been defying market expectations. A combination of a positive short-term outlook, impressive foreign reserve holdings, and the ongoing allure of its beaches and tourist hotspots all contributed to market confidence.
Should Investors be Scared?
In short, no. While recent events add to the uncertainty surrounding the Thai market and could be the first indicators of more serious trouble in the near-future, Thailand remains a solid investment choice for hungry entrepreneurs.
In addition to its strong tourism industry, investment opportunities abound in Thailand. As with many of Asia’s emerging markets, numerous sectors and industries are beginning to rapidly mature. These opportunities are attracting numerous foreign investors to Thailand’s shores. As a result, businesses like Mazars, an accounting service Thailand who provide services to local and foreign businesses, have been springing up across the country.
Thailand’s $54 billion transport corridor project, being constructed along the nation’s eastern seaboard, is an example of the kind of government contract that has attracted numerous foreign investors. Completing this and other major transport and construction projects is proving to be an apolitical priority for the country.
The success of some of Thailand’s more ambitious public infrastructure projects could be pivotal in determining the overall performance of its economy. Improving infrastructure and investing in the nation’s transport capabilities will both become increasingly important as the nation’s economy advances.
One of the biggest challenges to Thailand’s economy in the near future is one that many other economies across the globe are also having to contend with – an aging population. Thailand is expected to become the first developing economy to face the problem of an aging population, with 14% expected to be 65 or over by the year 2022.
The Bank of Thailand has proposed a number of measures to help the situation, including raising the age of retirement, reverse mortgages for the elderly, and offering incentives to employers who hire workers older than 60 years of age. However, the central bank lacks the legal authority to implement these measures and will instead depend on a new government to take up the initiative.
The longer the election uncertainty persists, the more uncertainty the Thai economy will have to reckon with. However, if the country can successfully navigate its current crisis, Thailand will continue to be one of the most important economies to watch in the near future.