Rising household debt puts Thai junta in a bind

Rising household debt puts Thai junta in a bind
Central Embassy, a sprawling luxury shopping center in Bangkok, remains quiet shortly before noon on a weekday.

BANGKOK - Thailand's post-coup junta faces a paradox: To correct the economic policy missteps of the previous government, it may be forced to implement very similar measures itself.

Private consumption in Thailand is anemic, due largely to the explosion in household debt brought on by policies introduced under former Prime Minister Yingluck Shinawatra. Aggressive government spending could offset this and help kick-start growth, but doing so would likely be seen as delivering handouts -- the same criticism that eventually brought down the previous government.

With increased household debt crimping private spending, concerns are growing that a delay in government investment will cause the economy sputter, said Supant Mongkolsuthree, chairman of the Federation of Thai Industries, at a regular meeting with the interim government on March 3.

The warning runs counter to the government's stance that the economy is recovering and could be taken as criticism of the junta.

Thailand's economic stagnation has its roots in the political turmoil that boiled over in late 2013, a result of growing antagonism between supporters and opponents of Yingluck Shinawatra, younger sister of fugitive former Prime Minister Thaksin Shinawatra.

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