The Economist ran a story that indicated that consumption is critical to most Asian countries-if they were to make real and sustainable progress. The statement that the Economist posted as the headline of the story is “Shopaholics Needed.”
The key question many businessmen and women in Thailand are asking is what is the correlation between political unrest and spending-and how that relationship-whatever it is-play out as the political environment changes.
As a neutural and non-political observer of Thai politics and economy, this is the question the government must address and find a solution to.
Regardless of how the economic condition fits into the political aganda of either the government or the opposition, for those who truly love Thailand, the economic well being of Thailand should come before politics-and this is because basic needs of many Thais are on the line.
In the short-term-the risk is that all it will take is one move and consumers confidence that is linked to consumption can evaporate and that is a major risk in the Thai recovery.
But also to those who are involved in long-term planning of any type will say, the threat in Thailand is that there may be a severe reaction to the far right agenda that push Thailand to the far left.
This is obviously a major risk and threat to any type of long term planning in Thailand.
By The Economist
Asia’s ability to decouple from America reflects the fact that the region’s downturn was caused only partly by the slump in American activity. In most Asian economies falling domestic demand was more important than the drop in net exports in explaining the collapse in GDP growth. The surge in food and energy prices in the first half of 2008 squeezed profits and spending power. Tighter monetary policy aimed at curbing inflation then further choked domestic demand.
The recent recovery in industrial production reflects the end of destocking by manufacturers as well as the large fiscal stimulus by most governments. But the boost from both of these factors will fade. Meanwhile, export markets in developed economies are likely to remain weak. So the recovery in Asian economies will stumble unless domestic spending, notably consumption, perks up.