A recent upturn in private consumption and investment in Thailand has not stopped the economy struggling last month, according to recent data.
The recovery in Southeast Asia’s second-largest economy has been weak and growth has lagged since a military coup in May 2014.
In September, private consumption rose 0.5 per cent from August, while investment grew by 0.4 per cent, the Bank of Thailand announced.
A senior member of bank staff, Roong Mallikamas, said exports “remained a drag”, according to Reuters.
Exports, accounting for more than 60 per cent of Thai gross domestic product, fell in September for the ninth consecutive month.
Industrial output fell by a significant 3.6 per cent in September.
Thailand’s exports, dominated by electronics, the agricultural sector and autos, has been hurt in the past year by the Chinese downturn after years of rapid growth.
The 2014 coup also took a toll on the economy.
The junta suspended agricultural subsidies while pouring tens of billions of dollars into vast projects like roads and train lines that were not expected to pay for themselves for years, claimed a New York Times opinion piece in September.
Already-extreme inequalities are growing, with 0.1 per cent of the population owning nearly half of the country’s wealth.
This is exacerbated by the concentration of government spending on Bangkok rather than rural areas.
“The only way to jolt Thailand out of its economic stagnation is to implement two measures that are sure to upset the Bangkok-based traditional elites: dramatically raise rural incomes [to boost domestic consumption] and aggressively devalue the baht [to encourage exports],” the New York Times article said.
An equally pessimistic forecast recently came from former Thai central bank chairman Virabongsa Ramangkura.
He said pessimism had scaled back hopes of a full rebound next year, with the Thai economy expected to make a U-shaped upturn.
“If it’s a cycle, a slowdown period will take five years and a growth period will last five years,” said Mr Virabongsa, who is also a former finance minister.
“During the slowdown duration, illusions that the economy is picking up emerge sometimes, but it grows a little bit before turning down again.”
Sluggish exports, inflation and falling goods prices have had an impact with a shortfall in the Finance Ministry’s revenue target being seen as a possibility.
The Asian Development Bank has cut its growth forecast to 2 per cent from an earlier 4 per cent, in contrast to the Bank of Thailand’s 2016 forecast of 3.7 per cent.