Report predicts growth of 3.6 per cent in 2016

Ian Pascoe, managing partner of Grant Thornton in Thailand, said in the "International Business Report: Thailand Focus 2015" that "there will be a modest increase in private consumption in 2016. However with global growth stunted and some sizeable systemic issues looming in the economy, the net effect of this will be a projected GDP rise of 3.6 per cent in 2016 and 4 per cent in 2017. Only stability with prosperity will be able to assist with this in these economically challenging times."

He said that studies have confirmed that governments installed by coups tend to prioritise stability over prosperity.

Paul Collier, a professor of economics at Oxford said in his 2009 book that the cumulative effect of a coup, tracked over several years, can be to reduce incomes by up to 7 per cent, with a 3.5-per-cent decline in the year of the coup itself. Thailand has suffered two coups in the last 10 years albeit each of which was preceded by months of instability and conflict.

However, this lack of stability that the coups sought to help solve will also play a key role in shaping the future economic fortunes of Thailand.

"There are several substantial systemic issues, which will start to act like an anchor on the long-term health of the economy. Even with substantial action now, it will take several generations for this anchor to be lifted and the Thai economy able to sail strongly again," the report said.

The Thai population is ageing dramatically. By 2040, a quarter of the population will be over 65. The National Economic and Social Development Board recently said that this would lead to a highly dependent population after 2040, with a workforce not able to sustain the rate of consumption. This will have the double negative effect of reducing the working population whilst at the same time incurring higher bills for healthcare. This burden will be absorbed by not only the people in part but also by the national and local Thai governments.

Thailand is attempting to move up the manufacturing "value tree" and away from low-cost labour intensive manufacturing towards a "knowledge-based" economy. However key ingredients of moving towards such an economy are not present: research and development spending, intellectual property protection, and investments in science and technology.

Thailand’s worldwide university rankings continue to decline and even levels of English competency are in decline in the younger generation of students.

Even a high-speed Internet, which is a major key to this, is severely lacking. This absence of digital infrastructure further contributes to even more basic challenges: business, banking and government transactions are still too paper-based thus encouraging a lack of transparency while incurring higher expenses for all involved.

Thailand can accelerate growth using three main levers – more household spending, more exports, and a substantial increase in government spending. The first two of these levers are already too hot to touch. Government spending is a possibility and is starting to happen with the large infrastructure projects that have been announced. The government’s bank balance can certainly support these projects.