Is Thailand's Economy Due for a Makeover? ; the New Leadership Has Raised Eyebrows with Its Unconventional Economic-Policy Ideas

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In some ways, it looks as if the generals that deposed elected prime minister Thaksin Shinawatra in a bloodless coup last month want to institute a completely new economic doctrine.

Retired General Surayud Chulanont, the junta-appointed premier, initially worried the business community when he told reporters his one-year government would focus on "sufficiency economy" and "indicators of happiness" instead of economic growth.

But while foreign investors have reason to fear that some parts of Thailand's open economy may start to close up, local business leaders expect the changes in economic policy to be largely rhetorical.

"Maybe in the short term we'll see some overreaction in dealing with Mr. Thaksin's policies, but as time goes on people will see the positive side of being more moderate," said Twatchai Yongkittikul, secretary-general of the Thai Bankers' Association. "Most of the old economic policies will continue. The interim government should focus on political reforms, so it's unlikely they will implement new economic policy."

Thai economy surprisingly stable

For all the political chaos Thailand has seen over the past year, the economy has proved refreshingly stable. Inflation is under control, the current account is running a surplus, and stronger than expected growth in both exports and tourism has helped offset a decline in domestic demand. Economists expect that a more stable government - regardless of whether the military installed it - should unleash a torrent of pent-up consumer spending and investment.

"All in all, things look good. The economy should bottom out in the fourth quarter and then start recovering next year," said Ussara Wiraipitch, a senior economist at Standard Chartered. The London- based bank is forecasting Thailand's GDP to grow 5.2 percent next year, much higher than the expected 4.1 percent growth this year.

The government's new economic team, led by respected former central bank chief and new finance minister Pridiyathorn Devakula, has already taken measures to reassure investors. It quickly approved a budget for the next fiscal year and said public investment projects would go forward as planned.

"The government will immediately start with [infrastructure projects] that are economically viable," Mr. Pridiyathorn told reporters. "We will invest prudently."

The measured tone of the military-appointed government contrasts sharply with the relentless marketing that characterized Thaksin's administration. Under the self-styled CEO prime minister, the government aggressively pursued privatization, free-trade deals, and cheap lending programs - and gave every new project a brand name.

Government spending programs became "megaprojects." A plan to develop top clothing designers turned into "Bangkok Fashion City." An initiative to promote more Thai restaurants overseas made Thailand the "Kitchen of the World. …