Thailand mired in political crisis

Two months after Thailand’s latest political crisis began, ongoing anti-government protests have prompted the prime minister, Yingluck Shinawatra, to dissolve parliament and hold elections on 2 February. But protesters want an unelected council to run the country. They have threatened to shut down large parts of Bangkok.

Stocks have slumped to a 15-month low and the Thai baht to a four-year trough against the dollar after a record 11-day losing streak.

What the commentators said

“It is hard to see a happy ending to all of this,” said Michael Peel in the Financial Times. The crisis reflects deeply entrenched divisions between the urban elites and the supporters of the former prime minister, Thaksin Shinawatra, the incumbent’s brother.

The urbanites see Thaksin as a usurper who has seized power by buying the votes of the rural poor with populist policies, such as cheap healthcare and rice subsidies. So far, the military has stood aside, but another coup can hardly be ruled out: they sided with the urbanites to oust Thaksin in 2006.

Yet another bout of political uncertainty is about the last thing the economy needs, noted Liau Y-Sing on Bloomberg.com. It was already struggling, with the global economy failing to bolster Thai exports, which are worth 60% of GDP. Foreign sales slid for a third successive month in November.

Tourism, a crucial sector worth 7% of GDP, has been “the economy’s only bright spot, [but it] is also beginning to feel the adverse impact with plans for more demonstrations in Bangkok”, said securities analyst Itphong Saengtubtim.

The crisis has also hampered state investment in infrastructure and consumer spending, which was already shaky, given a recent household debt binge. With the outlook so gloomy, it will be some time before investors see an economic or market recovery.

Merryn

Claim 12 issues of MoneyWeek (plus much more) for just £12!

Let MoneyWeek show you how to profit, whatever the outcome of the upcoming general election.

Start your no-obligation trial today and get up to speed on:

  • The latest shifts in the economy…
  • The ongoing Brexit negotiations…
  • The new tax rules…
  • Trump’s protectionist policies…

Plus lots more.

We’ll show you what it all means for your money.

Plus, the moment you begin your trial, we’ll rush you over THREE free investment reports:

‘How to escape the most hated tax in Britain’: Inheritance tax hits many unsuspecting families. Our report tells how to pass on up to £2m of your money to your family without the taxman getting a look in.

‘How to profit from a Trump presidency’: The election of Donald Trump was a watershed moment for the US economy. This report details the sectors our analysts think will boom from Trump’s premiership, and gives specific investments you can buy to profit.

‘Best shares to watch in 2017’: Includes the transcript from our roundtable panel of investment professionals – and 12 tips they’re currently tipping. The report also analyses key assets, including property, oil and the countries whose stock markets currently offer the most value.