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Sharp reversal of fortune for Prayut Govt?

THE Prayut government has been suffering a series of setbacks, self-inflicted or misfortunes, which make the overall situation hapless and miserable. The latest misfortune involved the outbreak of coronavirus in Wuhan, China, and spreading to many parts of the world. It is yet to be contained.

Preliminary estimates of economic damage suggest that it could reach 100 billion baht, more or less. Yet it is still too soon to determine because there are no signs of effective control. The figures of victims keep on rising.

Chiefly Thailand of late depends on income from exports and tourism, which will continue to slide. Exports will not enjoy a sudden surge anytime soon due to global economic slowdown and the baht currency continues to be strong against other major currencies.

The Bank of Thailand has not been doing much to curtail the baht strength for fear of possible backlashes from the United States. Current surplus in trade against the US is already under watch. Managing the value of the baht towards gradual decline could provoke the US into some unpleasant retaliatory measures.

With less competitiveness, the country cannot expect a sudden upsurge in exports. The other major source of revenue is tourism which has been depending on the influx of tourists from China which exceeds 10 million annually.

Now that the coronavirus will drastically cut down the number of Chinese tourists, due to a ban slapped on outbound tour groups by an association which oversees outbound tour groups. Income from this source will also plunge after the ban was imposed on January 27.

In brief, China does not want millions of its citizens to possibly spread the disease across the world. So far, the Chinese government has imposed a lockdown measure on Hupei Province, of which Wuhan serves as its capital.

The Thai Public Health Ministry, with strong reputation in efficiently responding to the coronavirus crisis, has been able to contain and control the 8 cases of the dangerous infection. No fatality so far, and the country continues to welcome Chinese tourists who tried to flee the outbreak.

It has an impressive track record of successes in handling the SARS and MERS, as well as the avian bird flu with minimal damage. The Thai public health and health care system have been very outstanding among first-world countries in terms of crisis response and treatment.

The government has other woes after House members engaged in improper voting practices for passage of the budget bill for 2020. It will require a trial by the Constitutional Court to rule whether an entire new process in the House is necessary.

If that’s the case, the government can expect a few months of delay and this means the budget would have just a few more months for meeting all commitments and investment. This is an unexpected disruption for the government which is yearning for more funds, some of which could help stimulate the slumping economy.

The coronavirus crisis and the setback in the new budget are just parts of the entire challenge to the stability of the Prayuth Government. The country has been suffering a severe drought in many parts of the country. Only the South is better off due to sufficient rainfalls in the past months.

With low production in the farm sector, in which second rice cropping is no longer possible, it means that paddy farmers have to deal with less income to repay old debts and make preparations for the new season. Their purchasing power, which has been substantial for the retail market, will be very limited.

The industrial and commercial sectors have been in the doldrums due to decline in domestic and export sales. The low-income sector has been gripped by hardships for a few years already. Small businesses have almost been forced into extinction by the chains of superstore and modern trade outlets.

The hardships are creeping up to seriously affect those in the lower-middle income sector. The people in the middle-income bracket are reluctant to spend money due to uncertainty over the prospects of the economy. If business firms with several hundreds of employees find it difficult to survive, then their bankers and creditors will be facing sleepless nights.

Commercial banks have already tightened their purse strings, not extending loans for fear of rising non-performing loans and bad debts. Without access to credit and funds, cash-strapped business firms will feel the pinch and a crunch could come finally. More woes for the lenders and the government will be in a very tight corner. Of course, other unresolved problems are still there.

Optimism is something the Prayut government should not hold. It will be lucky enough if another crisis does not rear its ugly head so soon. Longevity in office is no longer a certainty.

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