The uncertainty surrounding royal succession following the death of King Bhumibol Adulyadej in mid-October was resolved when Crown Prince Maha Vajiralongkorn accepted a request from the Parliament to become the 10th monarch of the Chakri dynasty. However, the coronation will be delayed until after the completion of a one-year mourning period for Bhumibol, and will likely occur in early 2018.
Shortly after the approval of a new constitution at a referendum held in August, officials in the military-backed government indicated that a general election would be held by the end of 2017, but there is a good chance that a vote will be postponed until after the coronation. The new monarch is neither as popular nor as revered as his father, and leaders of the military junta and members of the king’s Privy Council will no doubt prefer that Maha is securely installed before returning power to an elected civilian government.
In truth, key provisions of the new constitution will limit the freedom of any elected government to act against the wishes of the military, which will control all 250 seats in the appointed Senate, enabling it to veto nominees for the prime minister’s post and to initiate a no-confidence motion against a sitting government. The junta has also pushed reforms that amount to an attack on the independence of the Constitutional Court and a significant curtailment of political freedoms.
Positively, the junta-backed government has taken steps to create both opportunities for investment and a more hospitable climate for foreign investment. In addition to promoting public-private initiatives in transportation infrastructure and industries with potential to push Thailand higher up the value chain, such as biotechnology, the government has reduced bureaucratic obstacles in the areas of business start-up, access to financing, and bankruptcy.
The important tourism industry looks set to take a hit as the period of national mourning dampens Thailand’s party atmosphere, and the manufacturing purchasing managers’ index has remained stuck below the 50-level dividing expansion from contraction.
The baht has depreciated significantly as the surprise election of Donald Trump in the US presidential election and a subsequent tightening of US monetary policy has contributed to a surge in the dollar, but with other currencies in the region also weakening, the potential improvement in the competitiveness of non-commodity exports is limited. Against that backdrop, achieving real GDP growth of more than 3% in 2017 will likely depend on heavy investment spending by the government.
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