Business leaders and stock market upbeat after charter vote

Thailand’s stock market and currency gained strength last week after voters approved a new constitution in a national referendum, as the University of the Thai Chamber of Commerce raised its GDP forecast for the year to 3.3 percent, and the head of Central Group, the country’s retail giant, said he believes consumers will now begin to spend more, which will help boost growth.

The broad optimism following the charter approval was also present at the Bank of Thailand. Governor Veerathai Santiprabhob said that despite a weak global environment negatively affecting Thai exports, government spending on infrastructure in the second half of this year would help draw private investment that will drive growth. Had the charter failed to pass, those investments could have been delayed.

“We are on track,” Veerathai said. “We expect to see better government disbursement for large projects in the second half of the year. The result could also significantly reduce uncertainty on the democracy roadmap among both Thai and foreign investors,” he said.

Government spending on infrastructure and other stimulus measures had already propelled growth to an estimated 3.4 percent during the second quarter, surpassing the 3.2 percent of the first quarter, which was already the strongest growth in three years, according to Finance Minister Apisak Tantivorawong.

Shares on the Stock Exchange of Thailand (SET) soared to a 16-month high on the “yes” vote for the charter. The SET index has risen 20 percent this year, making it the best performing stock market in Asia. Thailand’s currency, the baht, rose to 34.97 to the dollar the Monday after the vote, after having fallen to a three-week low of 35.08 on the Friday before the poll, according to Reuters.

Thanavath Phonvichai, vice-president for research and director of the University of the Thai Chamber of Commerce (UTCC) Center for Economic and Business Forecasting, said his analysts have raised their forecast for this year’s economic expansion to 3.3 percent from a previous prediction of 3 percent.

The charter passage was a factor, he said. But improving consumer confidence, higher prices for farm products, modest inflation, an increase in the manufacturing production index and a lower-than-expect fall in exports were all indicators that the economy is starting to gain strength.

The head of one Central Group, a retail and hotel conglomerate and of the biggest players in the private sector, also said that the ‘yes’ vote would help the economy.

“With the positive outcome of [the] referendum, the government will do its job more easily,” said Tos Chirathivat. “Foreigners will have a better understanding of the consensus decision the Thai people have made for the country’s future.”