A Look at the Week’s Global Economic Events

In here, we take a look at global economic updates or interesting key developments that investors can take note of. This week brings me to Thailand’s economy.

Present scenario in Thailand

Currently, there is still a political gridlock in the country despite Army Chief General Prayuth Chan-Ocha ousting previous prime minister Yingluck Shinawatra earlier in May. As Thailand’s new leader, Prayuth would be facing a huge challenge in trying to revive the country’s economy.

According to data released by the Bank of Thailand on 30 May, the Private Investment Index (a measure of private investment conditions in Thailand) of the country had dropped by 4.7% in April compared to a year ago. In addition, the country’s Gross Domestic Product (GDP; the total market value of all goods and services produced annually) has slid by 0.6% year-on-year in the first quarter of 2014 and is expected to nosedive when the full effects of the political drama in Thailand are felt in the later stages.

In many parts of Thailand’s economy, declines have also been steep. For instance, the tourism sector in Thailand, which contributes almost 10% of the country’s total economic output, has plunged by 15% to 20%. Activity in the construction sector has also felt the brunt of Thailand’s political instability, falling by more than 12% from a year ago.

Meanwhile, domestic and foreign investment in Thailand has slumped by 9% – things will not look good for Thailand if those investors decide to shift their capital elsewhere permanently.

Going downhill before it gets better

All told, it seems that the worst is yet to come for Thailand. Nevertheless, my colleague David Kuo had mentioned in an interview with newswire BBC that there have been 11 military coups over the last 72 years (excluding the most recent one) in Thailand and the country has survived each one admirably, often even emerging from its political crises stronger than before.

If a rebound’s going to happen, like it has with previous coups, there may be investing opportunities worth looking out for. Investors wanting a piece of the action from Thailand would be interested to know that 7% of all Singapore-listed companies have operations in Thailand. Some of the well-known ones include Thai Beverage (SGX: Y92), Total Access Communication (SGX: B2W) and KrisEnergy (SGX: SK3).

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor James Yeo doesn’t own shares in any companies mentioned.