Overlooked but deeply consequential, 2024 will be the first time in a decade that Thailand is ruled by a civilian-led government. Whatever frustration and disenchantment that arise this year, memories must not run short. Thailand suffered deeply under the coup-backed regime of Gen Prayut Chan-o-cha. Seeing his back is politically good riddance, and having Srettha Thavisin as a thoroughly civilian and pro-business prime minister bodes well for the country. Yet Mr Srettha has his work cut out to boost the economy, address constitutional reform, restore Thailand's international standing, and stay in office into next year amid the global economic slowdown.
As the budget debate in parliament this week demonstrates, the Thai economy faces headwinds. The Srettha government's budget outlays of 3.48 trillion baht, a 9.3% increase from last year, will incur higher public debt, which is projected to rise to 61.7% of GDP. For a very long time, the public debt threshold of 60% of GDP seemed sacrosanct, but this is no longer the case. The government's planned loans to fund the 10,000-baht digital wallet for 50 million Thais for a total of half a trillion baht -- the ruling Pheu Thai Party's campaign pledge associated with Mr Srettha -- is expected to push debt levels up to 65% of GDP. Thailand's fiscal position has never been more vulnerable in recent decades.
According to World Bank calculations, the digital wallet scheme is estimated to represent 2.7% of GDP and stimulate growth up to 1% over two years. The scheme is also limited by high household debt approaching 100% of GDP and by the concentrated structure of the economy, dominated by giant conglomerates. The new budget is also criticised for resembling that of the Prayut years, with higher defence spending and lower expenditures for local administration at the provincial and district levels.
It is plausible that Prime Minister Srettha's first budget is part of the deal with the military-led conservative establishment that enabled his premiership and the return from exile of Pheu Thai's founder, Thaksin Shinawatra. That the budget outlays stay in line with the military-conspired 20-year "national strategy" promulgated during the coup period suggests that conservative interests may have been secured in exchange for Pheu Thai's lead role in the coalition government at the expense of the Move Forward Party, which was the largest vote winner last May. Nevertheless, economic growth in the range of 2.7-3.7% will still allow Thailand to move forward on its fragile return to democratic rule under civilian leadership.
Getting the Thai economy going again will depend crucially on other growth strategies from free-trade agreements (FTAs), an envisaged "land bridge" linking the Pacific and Indian oceans, and the projection of local "soft power". These schemes are still inchoate, well publicised but without traction yet.
FTAs are arguably the most critical because they could unleash competitive forces in the Thai economy at a time when the world trading system is stuck. Moreover, FTAs could provide foreign policy momentum for the country. Freer trade in key sectors, such as services trade, e-commerce, competition, and government procurement, could boost efficiency gains and provide growth avenues for years to come. However, Thai trade policy is ill-equipped to handle and hammer out negotiated issues and interests that require rigorous and technical expertise.
The ongoing Thai-EU trade negotiations are a case in point. The Thai side is relying on the EU's text as the starting point instead of having its own draft that reflects its interests and intentions. Owing to their vested interests, Thailand's big businesses remain to be persuaded about the benefits of FTAs. The recent announcement of an FTA with Sri Lanka is not a step in the right direction for Thailand's FTA strategy and policy because bilateral trade is insignificant while Sri Lanka has suffered from a prolonged economic crisis.
Apart from the economy, the constitutional rewrite will be controversial this year. At issue is whether the first two chapters on the role and prerogatives of the monarchy are to be included in the entire revision process. In fact, the position of the military in Thailand's constitutional makeup is the key to arranging broader political reforms. Until all political institutions are placed firmly within a constitution, Thailand's political conflict and its periodic volatility and turmoil will persist. Unsurprisingly, there will be efforts to install drafters of the new constitution who will safeguard the establishment's core interests.
At issue this year also will be whether Mr Srettha will still be prime minister a year from now. Thaksin, who is serving his royally pardoned and reduced sentence of one year at the police hospital instead of jail, is expected to make overt political moves, perhaps including the replacement of Mr Srettha with Pheu Thai leader Paetongtarn Shinawatra.
As Ms Paetongtarn is just 37 with a long political road ahead of her, Mr Srettha may end up in office longer than many think if the country's economic performance under his stewardship proves satisfactory. His hard work and genuine efforts have already won him credibility. Replacing a sitting prime minister is also a constitutionally difficult and cumbersome process.
At the other end will be whether the Move Forward Party and its flamboyant and popular leader, Pita Limjaroenrat, will be politically decapitated. Mr Pita has proved to be a clear threat to the established centres of power, but they may allow him to continue though on a leash of politically motivated charges. With a Constitutional Court decision on Jan 31, one week after Mr Pita's verdict, Move Forward is likely to survive for the time being. Bringing it down now does not seem worthwhile because it has been marginalised and manoeuvred into the opposition.
Abroad, the United States-China conflict will likely worsen as both sides become more entrenched. China's economic slowdown and plateauing geostrategic efforts will put more pressure on Chinese leaders not to buckle. At the same time, the US presidential election this year will ensure that neither of the two main political parties goes soft on America's top adversary.
For Southeast Asia, the worsening geopolitical environment augurs more instability, which Asean will prove increasingly inadequate to manage or mitigate, much less resolve. Chief among the many challenges the region will face is Myanmar's deadly civil war, whereby the military is losing battlefield prospects to a combined force of ethnic armies, local youths, and civilian leaders and politicians. The crumbling of Myanmar's military could well be the most surprising and spectacular outcome in Thailand's neighbourhood this year.