Political Unrest Dragging On The Economy ; Thailand’s real GDP surged by 5.8% year-on-year (y-o-y) in Q409, snapping four quarters of negative growth and confirming a full-year contraction of 2.5%. On our part, we have become slightly more upbeat about Thailand’s economic prospects in 2010, highlighting upside risks to our 3.6% real GDP forecast for the year given the plethora of positive data releases over the last few months.
That said, the as yet unresolved political unrest will be a considerable drag on the economy. We remain wary about the trajectory of the global economy beyond H110, especially as the ongoing eurozone sovereign debt crisis unfolds. Moreover, our global macro team is currently expecting a dip in the US and Chinese economies going into 2011, which would undoubtedly affect Thailand. We are therefore maintaining our projection that real GDP growth will remain somewhat muted at 3.7% in 2011.
A conflict of interest between the pro-Thaksin Shinawatra Red Shirts, anti-Thaksin Yellow Shirts, the military and Thai Prime Minister Abhisit Vejjajiva has severely dented the possibility of a quick resolution to Thailand’s political woes. In our view, Abhisit is running out of time and options to end the ongoing street protests held by the opposition Red Shirts for over two months. Indeed, previous attempts by Abhisit to capture the leaders, move the protestors by force and even offering a road map to elections on November has not been met with much success. With patience likely to be running low on all sides, we fear that Abhisit might be compelled to use force, or the Yellow Shirts might take to the streets, leading to further violence in the coming months.
Regarding policy rates, political uncertainties and benign inflation will keep the Bank of Thailand (BOT ) from hiking rates before Q310.
Indeed, consumer price inflation is still relatively low, coming in at 3.0% y-o-y and 0.6% month-on-month in April. However, given that the producer price inflation has been rising sharply, averaging 11.0% y-o-y and 1.1% m-o-m for the three months ending April, pointing to looming price pressures, we expect the BOT to start normalising policy in early Q310, taking the benchmark repo rate from the current 1.25% to 1.75% by end-2010.
Thailand’s economy is dragged down by the turbulent political situation that has stemmed the flow of foreign investors. More recently, the stalled projects at the Map Ta Phut industrial estate has further dampened investor confidence in the country. Although Thailand scores a decent 62.2 in The business environment rating, ranking it fourth (out of 16) in its regional peer group, we note that this score does not fully take into account the headwinds posed by the political situation and the loss of confidence in Thailand as a preferred foreign direct investment destination.
Thailand’s economic growth expected to return to 2019 levels in mid-2023
Although the economy would recover next year, the recovery is still substantially below potential level resulting in a large output loss and could affect Thailand’s potential economic growth in the future with the economy expected to return to 2019 levels in mid-2023.
The Siam Commercial Bank (SCB), one of Thailand’s largest commercial banks, said in its latest economic outlook report that the country’s economy may wait until the second semester of 2023 to return to 2019 growth levels.(more…)
World Bank cuts Thailand’s GDP growth outlook to 1% in 2021
The World Bank has said that Thailand’s economy is forecast to grow 1% this year, down from the 2.2% projected in July, hit by a spike in COVID-19 cases and a delayed reopening to visitors.
Can border reopening revive tourism in South-East Asia?
In Thailand, where pre-pandemic tourism accounted for 11-12% of GDP, the country lost an estimated $50bn last year as Covid-19...
Thailand dropped from UK’s tough covid-19 travel ‘red list’
Earlier, Thailand was listed among countries with high infection levels that were put on a ‘red list’, requiring arrivals to...
The ASEAN-Russia Trade and Investment Cooperation Work Program
ASEAN and Russia recently agreed to enhance and widen economic cooperation at the 10th ASEAN Economic Ministers (AEM)-Russia Consultations held...
Flexible Workspace Startup Worklounge Debuts with 20+ Luxury Member Lounges in Thailand
Worklounge launches a premium membership granting remote professionals and executives access to exclusive hotel lounges across Thailand. Their platform is...
5 insights to guide ASEAN’s digital generation in a post-pandemic world
We surveyed 86,000 people from six ASEAN countries about their views for a post-pandemic world. The ASEAN Digital Generation Report...