Political Situation
Since the control under control by military one of the main promises was that it would restore the country’s economy. But the support for the government has taken a blow in the face of weakening economic forecasts. Most notably, the economy grew a mere 0.7% in 2014.
What is more, the ADB has recently lowered predictions for Thailand’s growth from 3.6% to 3.2%, pointing to contracted merchandise exports and a continued deterioration in the consumer confidence index. To make matters worse, the Bank also cut projections for inflation from 2% to a deflationary rate of -0.4%.At the same time, Thailand is facing the worst drought in over a decade, and the Finance Minister SommaiPhasee says the drought could cut GDP by 0.5%. In an attempt to spur spending, the government has decided to freeze VAT at currently levels of 7% until September 30, 2016.
Indeed, one of the few pieces of good news is the return of tourism, which counts for about 10% of the Thai economy. While tourism slumped between 2013 and 2014 as a result of the political crisis, the numbers are rising and the Tourism board even predicts a record number of tourists for 2015.