By Marwaan Macan-Markar
BANGKOK, Jun 26 2003 (IPS)

More cars, worsening traffic jams and the accompanying automobile pollution in Bangkok may leave commuters exasperated, but behind this urban smog are palpable signs that the Thai economy has been expanding.

During the first five months of this year, car manufacturers sold more than 200,000 vehicles, with May standing out for this spike in sales. According to the Thai division of Toyota Motor Co., 42,751 cars were grabbed up by buyers in May – a 42 percent increase since December.

This is good news for the government of Prime Minister Thaksin Shinawatra, which views the Thai consumers’ appetite for new cars – and growing evidence of a healthy property sector – as key to securing the economy’s 6.7 percent growth in the first quarter of this year.

Other statistics give the impression that this South-east Asian country’s economic picture is indeed rosy, and that its recovery after the 1997 financial shock is growing deeper roots. There has been an increase in the electronic sector and food production, and Thailand’s stock exchange is becoming a hot draw for investors.

The optimism this has generated was evident when Thaksin presented his government’s budget for 2004 this week to parliament. The economy is stable and there is no need to worry, the premier said on Wednesday.

”The country’s financial standing is considered satisfactory and far from worrying,” Thaksin said. ”Some financial regulations may be further eased to simulate the economy.”

The government also underscored its commitment towards a policy that it credits for boosting growth – increasing domestic economic activity by giving people greater purchasing power. That has been achieved by ensuring that urban consumers have easier access to credit cards and that the rural poor have special loan facilities in each village.

”What the government is giving the poor are opportunities and access. One hopes they can turn it into long-term economic security,” Parichart Siwaraksa, coordinator of the ‘Thailand Human Development Report 2003,’ told IPS.

The current economic climate – and the fact that the country has an over one billion baht (23.7 million U.S. dollar) trade surplus and a current account surplus of twice that amount – has given rise to the view that Thailand may have finally moved beyond the 1997 Asian financial crash.

That year, Thailand was the first of the South-east Asian countries to be hit by a financial meltdown that resulted its economic growth plummet from impressive heights to negative figures, and forced over one million people to join the ranks of the poor.

The devaluation of the baht in 1997 triggered off a financial flu that affected other booming economies like Malaysia and Indonesia, as well newly industrialised economies like South Korea.

But the opposition Democrat Party is hardly impressed by the fact that Thailand’s growth is being driven by rising personal debt – a trend also seen in recent years in ‘recovered’ countries like South Korea.

During the budget debate, the opposition charged that the Thaksin administration’s policies could result in Thailand’s financial system collapsing under the weight of massive consumer debts. Critics also said that the country still has to cope with its burden of non-performing loans.

”Thailand will face a similar situation of economic crisis caused by populist policies as Latin America did,” senior Democrat Party parliamentarian Trairong Suwankhiri was quoted as saying in Thursday’s ‘The Nation,’ an English-language daily.

Besides, opposition figures accused the government of not being transparent about the amount to be spent under the 2004 budget – 1.028 trillion baht (24.6 billion dollars) which, the government revealed, was 75 billion baht (1.78 billion dollars) less than the figure for current year.

The government was leaning heavily on off-budget spending to boost growth, opposition leader Banyat Bantadtan told parliament. Left without scrutiny, such spending could rise up to 700 billion baht (16.8 billion dollars) over a few years, he speculated.

”The opposition is correct. The current policies can lead to a dangerous situation,” said Somboon Siriprachai, an economist at Bangkok’s Thammasat University.

The country is being denied the real economic picture, he added. ”The government is trying to fund some of its programmes without including them in the budget, and thus evading scrutiny in parliament.”

Walden Bello of Focus on the Global South, a Bangkok-based think tank, feels there is reason to worry about growth driven by consumer spending due to easy credit. ”It may work at the initial stages to stimulate an economy, but it is not a long-term solution, because it cannot be sustained,” he told IPS.

Since his emphatic win at the January 2001 general elections, Thaksin has launched a number of populist programmes aimed at helping the poor and helping to stimulate the grassroots and domestic economy.

Figures from the National Economic and Social Development Board (NESDB) suggest that the poor have felt the benefits of ”Thaksinomics,” as the prime minister’s economic agenda is dubbed here.

Currently, there are 13 percent of Thailand’s 62 million people living in poverty, which is a one percent drop from the figures in 2000, where 14.2 percent of Thais lived in poverty.

”Our policies aim to resurrect the grassroots economy,” said Suranand Vejjajiva, a government parliamentarian. ”We are trying to create wealth, empower the poor this way.”

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