Mr. Abhisit Vejjajiva was elected the 27th Prime Minister of Thailand, with 235 votes in support, beating Pol. Gen. Pracha Promnok who received 198 votes, with 3 abstentions in the extraordinary parliamentary session held yesterday. Prime Minister-Elect, Abhisit Vejjajiva, will be challenged by an economic slowdown that may even plunge into the worst downturn since the 1997 economic crisis. As hopes run high, the Thai business sector and general public, as well as the international community, will be watching to see how effective the new Prime Minister will be in tackling the domestic political crisis and economic woes as a deeper economic recession seems imminent.
Despite the political respite at the moment, KASIKORN RESEARCH CENTER (KResearch) holds the view that the new administration will face tough times ahead amid the global economic crisis and the impacts of the recent political showdown. High on the agenda will be rebuilding political stability and repairing the government's credibility to pave the way for tackling economic problems.
Among the most pressing issues are the impacts of the global economic crisis on Thai exports and SMEs, rising unemployment as a result of production cutbacks and business closures, especially in the export sector and tourism, eroding confidence among foreign investors and tourists in the wake of the protracted political chaos and a slump in farm produce prices. In the year to come, many hope for fiscal stimuli. All eyes are now on the new government's role for the preparation of the mid-year budget, budget deficit of THB 100 billion or higher and disbursements on the government budget. Focus will also be on how to address these economic problems and stimulate the economy, going forward.
The seizure of Suvarnabhumi and Don Mueang airports from late November to early December by the anti-government protesters – which was catastrophic to tourism and investment – has prompted KResearch to revise downward our economic projection for 2008 (prior projection was made on November 24, 2008). The 4Q08 economic growth may be only 1.0-2.0 percent, putting full-year growth in a range of 4.0-4.3 percent (against the earlier projection of 4.5 percent). For 2009, the economy may grow in a range of 0.5-1.0 percent in 1H09, before gradually entering a recovery in 2H09. We project that the full-year economic growth in 2009 may be within the lower end of the range of 2.5-3.5 percent. Amid rising risks to global growth and numerous economic problems at home, Thai economic growth may fall short of that projection. Attention should be paid to progress in the formation of the new government and their economic policy platform, especially its effectiveness in bolstering the battered economy.
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