Scattered throughout Bangkok’s rapidly changing skyline are the skeletal remains of incomplete high-rises. Partially constructed and sitting idle for decades, they stand as relics of a time when numerous commercial and residential properties emerged alongside a wave of economic growth in Thailand at the end of the twentieth century. In 1997, this wave came crashing down at the hands of risky overexpansion and increasing debt, leading to the deflation of the Thai baht and the contraction of Thailand’s economy. The construction of high-rises halted, and Thailand was left looking for a direction in which it could point the proverbial finger. Globalization and economic liberalization emerged as the prime suspects in the minds of the Thai people, with the most ardent blame being directed toward “the West.” This sparked a rise in populism and economic nationalism, culminating in tough protectionist measures and the election of billionaire businessman Thaksin Shinawatra as prime minister in 2001. Under Thaksin’s leadership, nationalism reigned and economic recovery was anemic.
Twenty years on from the crisis, Thailand’s economic collapse has given way to sustained, if fragile, growth. Mr. Shinawatra was removed in a military coup in 2006, and his sister, who became prime minister in 2011, was also overthrown in a 2014 coup that saw General Prayuth Chan-ocha assume power. Still in charge today, General Prayuth is setting ambitious economic goals, claiming that Thailand will be a developed country by 2036. If Thailand can achieve such a feat, it may avoid the kind of economic crisis that will require a “them” to emerge as the party to blame for the country’s issues. In this case, its rejection of Thaksin-style populism may hold.
But, just as the shock of the financial crisis in 1997 prompted a backlash of populism and economic nationalism in Thailand, recent shocks, both global and domestic, have raised concern that Thailand’s twenty-year journey back on the path of globalization could be in jeopardy. One of these shocks was the 2014 coup, after which many expected the military government to implement protectionist policies restricting foreign investment in the country. The death of King Bhumibol Adulyadej in late 2016 provided a further shock to stoke these fears. A widely-revered monarch who had ruled Thailand for 70 years, the King’s passing has released strong waves of Thai nationalism. Many worry that this could morph into a form of economic nationalism similar to the one borne out of the 1997 crisis, as those who admired the King may want to honour the spirit of his inward looking, self-sufficient vision of the economy. The shock of Donald Trump’s rise to power in the United States, an important ally to Thailand, has amplified concerns. The trade-denouncing leader of the world’s most influential country has bolstered a trend of populism around the world from which Thailand is not immune.
Fears that Thailand could slip back into its post-crisis populism and economic nationalism are understandable. Despite the enticing nature of such practices in today’s international environment however, the country has defied such expectations. Unlike its American counterpart, Thailand’s government has embraced trade with other countries, developing a 20-year economic master plan to promote connectivity among ASEAN member states and the wider region. This year, it is set to sign a free trade agreement with Sri Lanka and is likely to pursue other such agreements. In 2016, the government loosened regulations on foreign banks that were put in place as a part of the economic nationalism that stemmed from the 1997 crisis. The Prime Minister has even addressed Thailand’s education shortcomings by announcing that he plans to have more young Thais learning English and other foreign languages in school.
While all of this appears to be an encouraging rejection of populism within Thailand, policy action is not always the result of deliberate, stable policy-planning in the “land of smiles.” It must also be noted that while Thailand’s ability to refrain from slipping back into populism and economic nationalism after recent societal shocks is impressive, it has done so during another period of economic growth. In 2016, the Thai economy grew at 3.2% (up from 2.9% in 2015) and the baht rose more than 2 per cent against the US dollar, ranking it among Asia’s best performing currencies. Foreign investors are increasingly parking their money in Thai assets because they see the baht as a safe haven backed by solid foreign reserves amid global market fluctuation.
This growth is encouraging, but if the tides of economic well-being reverse like they did in 1997, Thailand may not reject economic nationalism in the same way that it has in recent years. With a controversial new King and a general election scheduled in the next year, the country will undoubtedly face more tests that could expose the fragility of Thailand’s strength in suppressing old habits. Those who want to see the continued avoidance of such policies in the face of future crises will have to hope that the Thai government notices the still-incomplete high-rises around Bangkok and remembers the consequences of responding improperly to crises.