"Look and despair," says The Economist. "A decade ago, Thailand was a shining example rare proof that in southeast Asia, a vibrant democracy could go hand-in-hand with a thriving economy."
Now it's in "disarray" after a court ruled that the prime minister, Yingluck Shinawatra, and nine cabinet ministers, must step down over accusations of nepotism in the appointment of the country's top security official in 2011.
The background to the case is long and tangled. Briefly, Thailand is locked in a protracted struggle between a populist elected government, and an elite of businessmen, the army, the judiciary and the royal family.
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This has been going on ever since Yingluck's brother Thaksin came to power in 2001 on a political platform that reached out to the rural majority, previously largely ignored by Thailand's rulers (Thaksin is now in exile after being deposed in a coup in 2006, but clearly pulls the strings from his base in Dubai).
Neither side emerges spotless from the battle. However, the extent to which the establishment has subverted the system in an attempt to oust the Thaksinites is probably the greater sin.
None of this is new for Thailand. Even before Thaksin came to power, the country was infamous for frequent coups. This has bred a certain level of acceptance of its ghastly politics: "In the past, international investors have given Thailand the benefit of the doubt, thanks to the economy's proven ability to bounce back," notes Pavida Pananond in the Nikkei Asian Review. But this time, the outcome could be different.
The Thai economy is unusually weak: economists expect it to grow at 2.8% this year, roughly half the rate of regional peers, says Michael Peel in the FT. It faces a growing need to improve productivity as rivals such as Vietnam compete for foreign investment.
That will be difficult with its politics now at a complete stalemate and the prospect of violence growing as "Thaksinite supporters threaten conflict on the streets", says The Economist.
Despite this, markets have barely moved: the MSCI Thailand index is still up 5% this year. In the past, it's paid to hope for the best whenever Thailand goes though this kind of upheaval but investors may be too sanguine this time.
Cris Sholto Heaton is an investment analyst and writer who has been contributing to MoneyWeek since 2006 and was managing editor of the magazine between 2016 and 2018. He is especially interested in international investing, believing many investors still focus too much on their home markets and that it pays to take advantage of all the opportunities the world offers. He often writes about Asian equities, international income and global asset allocation.
Cris began his career in financial services consultancy at PwC and Lane Clark & Peacock, before an abrupt change of direction into oil, gas and energy at Petroleum Economist and Platts and subsequently into investment research and writing. In addition to his articles for MoneyWeek, he also works with a number of asset managers, consultancies and financial information providers.
He holds the Chartered Financial Analyst designation and the Investment Management Certificate, as well as degrees in finance and mathematics. He has also studied acting, film-making and photography, and strongly suspects that an awareness of what makes a compelling story is just as important for understanding markets as any amount of qualifications.
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