Instability threatens economic growth

Instability threatens economic growth

A customer walks past a 15,000-baht tax break sign in 2017. This year, the regime launched another package to boost the economy, but political turmoil threatens growth. Bangkok Post photo
A customer walks past a 15,000-baht tax break sign in 2017. This year, the regime launched another package to boost the economy, but political turmoil threatens growth. Bangkok Post photo

Without decisive winners from the March 24 poll, there are fears that political instability will affect the country's economy. Such concerns are understandable given that three parties, namely the pro-military Palang Pracharath Party, and Pheu Thai Party and Future Forward Party (which brand themselves as the anti-regime camp), are engaging in a post-election tug of war.

No matter which camp manages to form a coalition, it is likely the administration will encounter a hard time amid political turbulence. It's unlikely that either will manage a full term. Some don't even believe any coalition will survive the first year.

Such fears would seem justified given our recent political history. Past experiences tell us political crises are entwined with economic downturns. The 1997 tom yam kung crisis that caused global effects can hardly be separated from the political tumult in parliament. The mismanagement of the baht plunged the country into an economic abyss that took years to recover from.

According to political protocol, when an administration encounters a political impasse, it normally calls for the dissolution of parliament. But if the voting pattern we saw on March 24 remains the same, how can we avoid deadlock and instability with another election? If such an impasse happens again and again, do we have to have another coup as a solution?

Lack of stability means investors will look elsewhere, and that means bad prospects for our economy. If that happens, we cannot untether ourselves from the poverty trap, and socio-economic disparity will aggravate divisiveness further.

Over the past decade, political divisiveness cost the country's economy a great deal. The military intervention led by the National Council for Peace and Order to a certain extent managed to secure stability with the country's economic growth rising from 0.1% during 2011 to a quite satisfactory 4% last year.

With worries over doomed politics, the Finance Ministry has issued another economic stimulus package worth 20 billion baht for the second and third quarters that comprises seven measures as follows:

Tourism tax breaks. The scheme features tax rebates for spending on tourism services, including accommodation and guide fees, up to a maximum of 15,000 baht.

Parents who spend on their children's school uniform, sports items and books ahead of school opening can claim the as-yet-unspecified amount for tax deduction.

Book purchases will be tax deductible.

Extra cash for state welfare cardholders to spend on their children's school uniforms, books and sportswear.

Tax deductions for operators who invest in point-of-sale terminals.

Student Loan Fund privileges for those studying in fields related to 10 targeted industries, aiming to enhance workforce development in the long run.

Special mortgage offers for home buyers to be allocated by GH Bank and the Government Savings Bank.

In my opinion, such packages would be a waste if the country suffers another political crisis which causes political infighting leading divisiveness to widen.

No matter how much money is put in the system, the country's economy can hardly grow under such conditions and that will deal a heavy blow to those in the lower spectrum, as well as those with a fixed salary.

Pressing political problems that result in economic hardship may make people feel hopeless and tired of politics. That is not good for the country. In fact, such hopelessness may drive them to pick bad, unqualified leaders who give them false hope about a better future.

With poor political prospects ahead of us, it's necessary political leaders do their best to compromise for the benefit of the country, not personal gain, to prevent Thailand plunging into yet another crisis.

Wichit Chantanusornsiri is a senior economics reporter, Bangkok Post.

Wichit Chantanusornsiri

Senior economics reporter

Wichit Chantanusornsiri is a senior economics reporter, Bangkok Post.

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