Don't expect too much from Somkid's economic dream team

Yet many businesses are positive about this new Cabinet, and have high hopes that it will restore confidence in the economy. They believe that Somkid, who’s also a deputy premier, and his team will bring the economy a much-needed boost by getting people to start spending again – at least in the short term.

However, some economic gurus are warning people against getting too excited. They believe this government will require at least five quarters to rebuild the economy – provided their missions are successful. 

There are a number of reasons for this: 

Firstly, the government’s budget-disbursement process for investments is not fully functional yet, and infrastructure projects worth a total of Bt1.6 trillion are still pending Cabinet approval. 

This means the projects will not get underway at least until 2016. 

Secondly, the problem of laws blocking the participation of private firms in these mega-projects has not been resolved yet. 

Thirdly, Thailand is heavily reliant on giant economies that are also experiencing an economic slump. It’s tough for the government to boost the economy at home when the economies it relies upon have not yet recovered. 

Then there was China’s recent economic hiccup and stock market meltdown, which sent ripples through the global economy, including Thailand. China has been Asean’s largest trading partner since 2009, and last year Thailand was its fourth largest trading partner in Asean. 

Varavan Tarapoom, chief executive officer of BBL Asset Management, said in a Facebook post that the global stock market tumbles over the past few days could be blamed on three key factors. 

Firstly, she pointed out, there had been a fundamental change in China’s economy, proved by the fact that there had been price drops in key areas such as auto sales, freight loading, electricity usage, and exports and imports over the past few years. 

Secondly, she said extreme incidents such as cyber wars and actual wars were happening far too frequently across the globe. 

Lastly, she said, speculative foreign investors had packed up and gone home after selling shares in emerging markets, including in Thailand, out of fear of the first two factors. 

The stock index is normally a barometer for measuring the business environment in relation to the growth of corporate earnings and the economy.

Thailand’s growth this year is likely to be below 3 per cent and exports might also flatten or contract, according to latest predictions from many economic houses. 

Somkid, however, promised the private sector at a seminar yesterday that he will focus on rebuilding confidence in the economy – he said one of his missions is to ease the worries of the business community. 

“The situation is not a crisis yet. Many firms are doing well, but are worried about the weakness of farmers, which might eventually affect corporate wealth,” he said, adding that Prayut Chan-o-cha’s government was very business friendly. 

This probably explains why Somkid’s first priority is to inject money into the system, focusing on the grassroots and small and medium-sized enterprises – a job he aims to complete in the next three months. 

Perhaps we should wait and see, as what happens in the next few months will shed some light on the state of the economy in the future.