Good news is hard to find these days, especially in Thailand. Our exports tumbled 7.87% in June, resulting in a 4.84% contraction in US dollar value in the first six months of the year. Meanwhile, the stock market is falling almost every day as corporate earnings weaken.
With falling exports and a weak outlook, the Fiscal Policy Office has lowered its GDP growth forecast for this year from 3.7% to 3%. Significantly, it now forecasts a 4% contraction in exports, compared with 0.2% growth prediction earlier. It is not just exports.
All other growth engines such as consumption, investment and government spending appear to have stopped functioning.
The recent announcement that Thailand remains on Tier 3 — the lowest possible ranking — in the US Trafficking in Persons (TIP) report has added to the pessimism. Although the TIP report does not include any mechanism to impose trade barriers, there will surely be economic consequences, especially for the fishing and seafood industries.
Across the region there is not much good news either. Growth continues to moderate in Asia. In its updated economic outlook report, the Asian Development Bank (ADB) cut its growth forecast for developing Asia to 6.1% this year and 6.2% next year, from the 6.3% it forecast in March for both years.
While the ADB has lowered its forecasts for most developing Asian countries, including Thailand (from 3.6% to 3.2%), it has kept the forecast for India unchanged. The world's second most populous country does not attract as much attention as its even bigger neighbour, but India's economy is expected to expand by 7.8% this year and 8.2% in 2016, the highest in the region and higher than China (7% and 6.8% according to the ADB).
Led by a reform-minded government, India is becoming one of the few bright spots in a world where growth is painfully slow. It is expected to outpace China and take the crown as the world's fastest-growing large economy.
The recent turmoil in China's stock markets has also been positive for India. International investors are pulling money out of China and pouring it into India. The country's recent outperformance is partly due to a steady macroeconomic outlook and relative insulation from the slowdown in China compared with other Asian countries.
India is not part of China's supply chain and only around 5% of its exports go there. Exports account for only about 27% of Indian GDP, so it is far less export-dependent than most of its Asian peers. A weaker Japanese yen, which is hurting Asia's manufacturing exporters, cannot do much harm to services-intensive India. And while deflation is a worry for many countries, it is helpful to India which has suffered from high inflation.
When I was in India a few years ago its future looked bleak. There was an air of poverty everywhere and it did not feel safe to walk the streets even in daytime. Weak economic growth, inflationary fear and a lack of good leadership had resulted in poor economic and social progress.
But things have changed since Narendra Modi became prime minister. He promised to reform the government and kick-start the ailing economy. Poverty is still rampant but India's future looks more promising. Real GDP growth rose to a four-year high of 7.3% in the fiscal year ended March 31, from 6.9% a year earlier.
The growth dynamic is backed by robust private consumption and an investment upturn, fostered by government's determination to cut red tape, invest more in infrastructure and deregulate parts of the economy. Adding to this positive development is a much stronger central bank, led by Raghuram Rajan, a former IMF chief economist, who has vowed to keep inflation contained.
Another important aspect of India's infrastructure is probably its human capital. About 65% of India's population is aged 35 years or under, a pool of young workers that will give the country a strong competitive advantage in the coming years.
In other words, India has the world's largest youth population. Its population growth is 1.2% per year, much higher than in many countries including China where growth has slowed to 0.5%. It is projected 20% of the world's working-age population will soon be in India.
After several years of slow progress, India seems finally to have emerged from the shadow cast by other countries such as China. The country is likely to be one of the few bright spots in a world where economic activity is slowing down.
Although it remains to be seen whether India will be able to live up to its high expectations, there is a real possibility that the world's largest democracy could play a major role in the global economy in the 21st century.
Dr Tientip Subhanij holds a PhD in economics from the University of Cambridge and has a dual career in banking and academia. She can be reached at tien201@yahoo.com