Economic prosperity is in the eye of beholder
With GDP growth in the first quarter of this year reaching 4.8% year-on-year, the regime under Prime Minister Prayut Chano-cha may believe it has good reason to boast of its performance, especially when it is marking its fourth year in power. But wait, such economic prosperity may not be the reality for many.
Indeed, some people appear to feel quite the opposite.
This contradiction is reflected in a series of poll surveys which show a large number of respondents — if not the majority — are still unhappy with the performance of the economy under the direction of economic czar Somkid Jatusripitak despite a number of initiatives.
The country’s gross domestic product in the first quarter, announced by the National Economic and Social Development Board (NESDB), grew by 4.8%, the highest clip in five years. The rate outpaced the 4% recorded in the previous quarter.
Apparently, the country’s GDP growth is mainly driven by an increase in exports, domestic consumption as well as tourism revenue.
The promising GDP growth in the first-quarter results, as indicated in the NESDB’s report, spurred a hike on its economic growth projection for this year to 4.2-4.7% from 3.6-4.6% in February.
Several brokerages have also raised their targets for Thailand stock market index this year to nearly 1,900 points.
But this remarkable data does not seem to impress the public, as suggested by the latest poll results.
In a survey by Suan Dusit Poll on the fourth anniversary of the National Council for Peace and Order (NCPO) seizing power, conducted from May 15-19, the majority of respondents, or nearly 42% said they were mostly dissatisfied with economic and cost of living problems, 34% raised concerns over corruption in various government projects and almost 20% were critical of the government’s sluggishness in handling problems.
Asked what has pleased them during the past four years, just over 56% said the country has been free from violent street protests; 31% cited suppression of corruption, drugs and so-called dark influences; and 24.6% cited the restoration of public order.
Meanwhile, the results of a Nida Poll conducted on May 15-16 showed no significant differences.
Nearly 31% of the respondents said they were not happy with the regime’s performance in solving economic problems, followed by 15% complaining about the lower prices of farm products; and 12% griping about the high cost of living.
Meanwhile, 53% said they were happy without the political unrest; almost 10% said they were satisfied with the reduction in corruption cases; and 6% with social order being restored.
The results of the two polls were, in fact, not very different from previous surveys over the past four years.
The public has repeatedly suggested that they have been suffering economic difficulties while the regime has staunchly defended its performance, insisting that its economic management is good, as proven by economic figures.
I have tried to find out why the general public does not feel better about the economic conditions even though the overall figures look promising. Here are the possible reasons:
Firstly, the income gap in this country remains wide. Low-income people, or even some of those in the middle-income group, may not feel any improvement despite an increase in their daily wage.
Besides, the prosperity from economic growth is concentrated among particular groups of people, especially those at the top of the social spectrum. The trickledown effect has yet to occur.
Deputy Prime Minister Somkid earlier conceded that key contributors to exports are only about 70 large companies, 50 of which are operated by foreign firms.
This means that the most of the benefits of growing exports, which are
the main contributor to the economic growth, do not go to small and medium business operators but to small groups of large companies dominated by foreign investors.
On the other hand, the 3.6% growth in domestic consumption which accounted for 55% of GDP in the first quarter may impress many. But the growth was mainly driven by durable goods consumption, such as vehicles and electric appliances while consumption of non-durable goods such as food, medicines and clothes remains low. This shows the purchasing power of low-income people is still in the doldrums.
Another key factor causing many people not to feel the benefits of economic growth is that most farmers are still suffering from low prices for their products.
In the first quarter of this year, production volume of agriculture products increased substantially but the income of those in the agricultural sector fell 4%.
About 30% of Thailand’s population, or 20 million people, are farmers. Their living conditions depend on farm product prices. GDP growth means little to farmers as long as farm product prices remain low.
Moreover, the Prayut regime is strongly against farm subsidies. This is likely in the aftermath of the notorious rice-pledging scheme where it may not want to repeat the policy of the government it topped in 2014. But such a stance means it allows suffering to happen without state help, which is unfortunate.
In fact, agricultural subsidies are not all bad. If implemented appropriately, subsidies can benefit substantial parts of the population. Don’t forget that some major economies including the US, Japan and India, make use of subsidies, albeit to different degrees, as an economic tool.
And the regime must be aware that not all Thai farmers are lucky like durian growers who are enjoying inflated prices for the king of fruits due to high demand from Chinese traders and customers.
That is in contrast to rice and pararubbers growers who this year face grim prospects due to low prices. In particular, rubber exports in the first quarter of this year tumbled by 34% due to shrinking demand from China.
While avoiding farm subsidies, the Prayut government has opted to directly inject money into the pockets of 11 million people who are classified as the poor via the state welfare scheme. This could ease the hardship of high living costs but in the meantime, there is no denying that such a policy also directly benefits manufacturers of consumer goods.
The Prayut government can definitely claim some credit for its economic management and the GDP growth. But it needs to make more of an effort to allocate the prosperity generated by economic growth to ensure that the all groups of people get a fair slice of the economic pie.
The public has repeatedly suggested that they have been suffering economic difficulties.