Economists concerned about Thai government’s populist polices

Despite the new Thai government’s confidence that a quick set of aggressive measures will boost economic growth rates next year, economists are worried that Prime Minister Yingluck Shinawatra’s populist policies may cause trouble in the coming months. In a landslide victory in July, the 44-year old business executive promised to reprise the same free-spending policies promulgated by her elder brother, Thaksin Shinawatra. Thaksin was ousted in a military coup five years ago. In a bid to increase local consumer spending and minimize reliance on the unpredictable European and U.S. markets, Yingluck plans to raise the minimum wage next year and slash corporate tax rates. Yingluck recently suspended the collection of an excise tax on gasoline and diesel fuel sales, a move which critics say indicates that the government is reverting back to subsidies which have a tendency to distort the market. Yingluck said that suspending excise taxes on diesel fuel, biofuels and gasoline will help keep inflation at bay. With the suspension of levies, the retail price of 91-octane fuel was cut by 7.17 baht (US$0.24) a liter. Costs of 95-octane gas was slashed by 8.02 baht (US$0.26) a liter, and diesel fuel prices were reduced by 3 baht (US$ 0.097) a liter. (September 1, 2011)