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Protests blocked the way to Thailand's economic recovery

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Tran Cong
Protests blocked the way to Thailand's economic recovery

Nomura predicts that Thailand's economic growth will decline 7.6 percent this year due to the impact of the Covid-19 epidemic. The situation became even more difficult because of political instability.
CNBC quoted Mr. Euben Paracuelles, Head of ASEAN Division at Nomura Financial Company, said: "Thailand is relatively successful in controlling Covid-19 epidemic, but demonstrations can affect economic recovery. health ".

Protesters called on the government to draft a new constitution based on the will of the people, stop punishing those who opposed the government, and disband National Assembly and Prime Minister Prayuth Chan-ocha's government.

On September 24, the Thai National Assembly voted to postpone the amendment of the constitution at the request of protesters until November. This decision made protesters angry. More than 1,000 people gathered outside the National Assembly building to demand a constitutional amendment.

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According to Mr. Paracuelles, history shows that political instability tends to directly affect the economy, especially the impact on business psychology and investment spending. It even has an impact on important fiscal policies.

Protesters urged the government to draft a new constitution based on the wishes of the people. Photo: Getty Images.
Nomura forecasts the Thai economy will shrink 7.6% this year. The forecast figure given by the Central Bank of Thailand is 7.8%, according to the latest data on the website.

According to Mr. Paracuelles at Nomura, structural problems hindered the Thai economy from before the Covid-19 epidemic. For example, the country is heavily dependent on the tourism industry. That could have a spillover effect on the rest of the domestic economy, already strained by population aging and lack of competitiveness.

The Thai government still has plenty of room to finance, but implementation matters. "In the current fiscal year, the Thai government only plans to spend 45% of the total 60% of its budget allocated from the loan fund, about 1,000 billion baht (31.63 billion USD)," said the economist at Nomura commented.

Amid political turmoil, the Thai government can use populist measures to appease protesters. However, it is difficult to talk about efficiency at this point, according to Mr. Paracuelles.

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