After a steady-as-she-goes three years at the helm of Thailand’s fiscal ship, two words sum up the challenge facing the country’s finance minister Apisak Tantivorawong: political risk.
In our annual study of finance ministers, Tantivorawong's lacklustre preparation to counter the blowback from political headwinds provides the backdrop for a drop of two places in his league positioning to 10th place from 8th last year.
A recent abortive and unprecedented attempt by Princess Ubolratana Rajakanya to run for prime minister in elections this year after a half-decade of military rule, compounded by the continued influence of the exiled prime ministerial sibling double-act of Thaksin and Yingluck Shinawatra, has plunged the country into yet another round of political uncertainty.
Up to this point, Thailand’s economy had been ticking over relatively well under Tantivorawong’s stewardship following the military coup d’etat of 2014, which installed the National Council for Peace and Order led by ex-army general strongman Prayuth Chan-ocha.
Prior to that, the Thai economy had consistently missed government targets, the result of sluggish exports and domestic demand.
In 2015, Tantivorawong, a former chairman of the state-owned Krung Thai Bank, was appointed to the Ministry of Finance by Prayuth with a brief to boost economic growth in a bid to shore up the popularity of the military junta as the country prepared for elections.
Against this backdrop Tantivorawong – considered by many to be a no-frills, safe pair of banking hands – presided over a degree of economic expansion, with GDP growth reaching 3.9% in 2017.
That picked up further last year thanks to growing private consumption and investment, bolstered by state-wide infrastructure programmes.
Although economic growth dipped to 3.3% year-on-year in the third quarter as broader trade concerns weighed on exports, this was preceded by a strong start to the year in which the economy expanded by 4.9% and 4.6% year-on-year in the first and second quarters, respectively.
At present, the country also boasts a current account surplus of 7.8% of GDP and has reserves worth about $235 billion.
The threat of growing internal risk factors in addition to external uncertainty fuelled by the Sino-US trade war and a slump in tourism were clearly on Tantivorawong’s mind when addressing the Thai media mid-February.
“The peak of the current economic cycle was during the first two quarters of last year, followed by an acute slump in the third quarter," Tantivorawong said at that time. "Given that consumption and private investment are still continuously growing, we expect the economy to continue to grow in 2019, but at a slower pace.”
In its latest investor report – which preceded the recent unsettling events around the princess’ unprecedented and quick-to-unravel political intervention – ratings agency Moody’s said that it expected Thailand to “sustain its relative fiscal strength and robust external position against a backdrop of more muted GDP growth ahead." But it also noted how the relative political uncertainty in Thailand had held back investment.
That is something Tantivorawong has so far done little to help counter. Whether he has the political wriggle room to do so, though, is a moot point.
As Punchada Sirivunnabood, assistant professor at Mahidol University’s Faculty of Social Science and Humanities near Bangkok, put it: “It’s a scary time ahead, recent events prove that political polarisation is still there, and is more deeply rooted in the country than before.”