The lack of a functioning government early this year also curtailed public finance capability, subjecting infrastructure investment to further delay and putting 2015 fiscal budget at risk. Tourism, a shining sector in 2013, was increasingly weighed by security concerns. A tepid recovery in exports offers only a partial offset to softening growth, and could not prevent the overall economy from contracting in the first quarter. It is under this backdrop that the end to political stalemate in May provided some cause for short-term optimism. The first relief comes from a resumption of government spending. The presence of a fully functioning government ensures that the budget for 2015 fiscal year could be prepared on time, eliminating the risk of a Thai-style “fiscal cliff”. An acceleration of public disbursement in the short-term is also providing a welcomed boost to the economy. Plan for public investment in infrastructure is now back on track, and there have been renewed efforts to maximize the efficiency of these projects. A resumption of effective fiscal policy, in turn, lends support to domestic demand recovery. Repayment of overdue debt to farmers, approvals of backlog projects by the BOI, and fresh loans to the SMEs provided quick relief in and of themselves, but the combined multiplier effects could also be meaningful. By shoring up income and improving overall sentiments, these measures constitute an important effort to revive private spending. Fast indicators already suggest that private consumption and investment are stabilizing, and private confidence improving.
Prasarn Trairatvorakul: Managing the economy at a crossroads Speech by Dr Prasarn Trairatvorakul, Governor of the Bank of Thailand, at the Foreign Correspondents’ Club of Thailand (FCCT), Bangkok, 3 July 2014. *  *  *  Distinguished Guests, Ladies and Gentlemen, It is my pleasure to be here once again, to address the oldest press club in Southeast Asia. I congratulate you for the outstanding works in Thailand over these years. Journalism is indeed a special profession, one whose status is sometimes hailed as “the fourth pillar of the state” alongside the legislature, the executive and the judiciary. Such privilege comes with a somber weight of commitment to accurate reporting and balanced viewpoints. These qualities are needed more than ever today, as there is much public demand to understand the implications of the recent political development. I will share with you today my early assessment from a policymaker’s standpoint, regarding the latest economic outlook and key challenges to public policy lying ahead. Current economic assessments First, let me give you a brief summary of where we are. The buildup of political tension late last year came at an unfortunate time for the economy. The economic activity was already hampered by weak domestic demand amid high household debt and a lackluster global economy. As the political uncertainties persisted, the repercussion on consumer and business confidence grew, denting private consumption and investment.