The market reaction implicitly highlighted Thailand’s financial problems that, while less serious than India’s now or its own during the 1990s, have intensified amid slowing economic growth, rising consumer debt and government spending on subsidies.
Having re-established a reputation as an attractive investment opportunity after the 1997 Asian financial turmoil, Thailand is now subject to a wider scepticism facing many emerging markets seen as needing to undertake difficult but important structural reforms.
“Thailand feels to me like a place with no long-term road map,” said Su Sian Lim, a regional economist for HSBC. “It always has been a very laisser-faire economy. But now we are coming up against more long-term structural issues that can’t be solved with a laisser-faire approach.”
The flood of easy money into emerging markets has helped buoy the Thai economy in the face of underlying concerns ranging from sluggish export performance – and a consequent growing current account deficit – to slow progress on investing more than $60bn earmarked for much-needed infrastructural improvements.