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Thai economy is a disaster in slow motion

Prime Minister Prayuth Chan-o-cha doing too little to keep living standards rising

| Thailand
Prime Minister Prayuth Chan-O-Cha thought his job was done when GDP growth rate was near 5%.   © Sipa/AP

William Pesek is an award-winning Tokyo-based journalist and author of "Japanization: What the World Can Learn from Japan's Lost Decades."

Discussions about lost-decade candidates in Asia tend to find their way to Bangkok these days, and for good reason.

Yes, Southeast Asia's second-biggest economy is finding its footing despite the trade war and COVID-19 slamming global demand. Teflon Thailand is seen growing as much as 4% in 2021 -- numbers that officials from Tokyo to Washington can only dream about.

Yet the real focus must be on 2031. What, let us be honest, is General-turned-Prime Minister Prayuth Chan-o-cha doing to ensure living standards do not continue grinding lower over the next 10 years? Virtually nothing.

This is a disaster in slow motion, considering how little leaders in Bangkok did over the last 10 years to build a more vibrant and inclusive growth model. And the result may be a lost decade within a lost decade.

More to the point, a generational no-progress period that comes back to haunt a nation that has been trying to right its economic system in one way or another for a couple of decades.

Thai youth is very much in the news as Generation Z finds its activist mojo. The rebellions of the last six months even targeted the royal family -- typically a no-go zone thanks to harsh less-majeste laws, and Thai police are in a losing battle to banish the use of the three-finger salute of The Hunger Games fame.

Yet Prayuth's government may be planting the seeds for much bigger demonstrations to come. COVID-19 fallout is increasing poverty rates globally. Even against this backdrop, the World Bank's latest take on Thailand's 2021 makes for sober reading.

Credit where it is due: Thailand is indeed experiencing a solid bounce-back from a likely 6.5% contraction in 2020. Its financial sector, the World Bank said on Jan. 20, "has so far been able to weather the pandemic shock." Thailand, it added, "has performed relatively well compared to its peers in the region in terms of the scale, speed and targeting of its fiscal response centered on a 1 trillion baht ($33 billion) package to fund cash transfers, the medical response, and economic and social rehabilitation."

That is fine for 2021. But "COVID-19 may also have longer-term scarring impacts on potential output, including through its effects on the labor market," the Bank warned. Further, it notes, "the primary impact has been a spike in unemployment, with a large increase among young people, and a widespread reduction in hours worked."

As a result of the pandemic, Thailand's unemployment rate doubled to 2%, the highest level since 2009. Yet, there is a "particularly large increase for young people," the World Bank said. The real pain, in other words, is being felt by The Hunger Games savvy demographic group most likely to take to social media or the streets.

How we got here is no mystery. Since grabbing power in a 2014 coup, Prayuth has led much like the revolving door of leaders from which his junta felt Thais needed rescuing. Between Prayuth's coup and the previous one in 2006, eight people served in the role of prime minister, with nary a memorable reform to their name.

Pro-democracy demonstrators give a three-finger salute in Bangkok in October 2020: how we got here is no mystery.   © Reuters

The common thread is falling into the cult of GDP. Just like his flurry of predecessors, Prayuth thought his job was done when gross domestic product growth rate was near 5%. It was Prayuth's cue to pivot back to pet issues -- such as law and order, and muzzling media critics. For good measure, Prayuth sends out his economic foot soldiers to excite the masses with lofty talk of multibillion-dollar infrastructure projects and Thailand 4.0 transformations.

Yet all too little is afoot to get per capita income to $8,000 or make Thailand a major player in a region working to put unicorns ahead of factories. With exports and tourism -- which make up more than 70% of GDP -- reeling, short-term stimulus moves are justified. But longer-term steps to raise Thailand's competitive game, steps delayed these last 10 years, are far more important.

Indonesia, Malaysia, the Philippines, Singapore and Vietnam are scrambling to produce the next Grab, Gojek or Tokopedia. To keep Thailand in the game, Prayuth's men must create not just a demand-driven workforce but a results-oriented business culture. That means tweaking tax and regulatory regimes to support startups. It means vast increases in funding for more internationally facing education and training programs.

Thailand could do with more meritocratic employment practices. Performance-based compensation and promotions would increase productivity and innovation so that a startup boom leads the nation in 2031.

Sadly, Prayuth's men just seem focused on getting through 2021 as critics become more vocal. And as Thailand makes international headlines for all the wrong reasons. Case in point: former opposition leader Thanathorn Juangroongruangkit facing draconian lese-majeste laws just for disputing COVID-19 vaccine plans. They rely solely on a biopharmaceutical company ultimately owned by King Maha Vajiralongkorn.

All the while, the future is happening fast in the world surrounding a Bangkok political establishment stuck in time. This is time Thailand does not have to waste. And time better spent ensuring that The Hunger Games remains just a movie, not the future for Thai youth.

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