The overall cost of the ongoing political crisis in Bangkok remains hard to quantify, but several agencies have warned against possible negative impact on the country’s growth for next year.
Thailand’s gross domestic product GDP will likely grow less than 3 per cent if the nationwide political protests are prolonged, caretaker Deputy Prime Minister/Finance Minister Kittiratt Na-Ranong said today.
He said the economic cabinet assessed in the meeting today that the months-long protests by the People’s Democratic Reform Committee have negatively impacted domestic consumers’ confidence and tourism in Bangkok and elsewhere. The political protests could dampen this year’s growth to only 3.1 per cent and it could be lower than 3 per cent if the political woes continue, he said.
Tourism is not the only sector Thailand needs to worry about, Bangkok also risks losing out on foreign direct investment if the deadlock continues. Known as Detroit of the East, Thailand is the seventh largest car manufacturer in the world, churning out almost 2.5 million units a year.
The already-low GDP could plunge to only 3.1 per cent if the political unrest carries on and the Feb 2 general election is called off, consequently affecting confidence, trading, consumption, purchasing power and debt payments, said Mr Somchai. Thanavath Phonvichai, vice president for research at the University of the Thai Chamber of Commerce, said the Bangkok shutdown will possibly dip revenues from consumption and tourism by Bt5-10 billion a week.
Thailand is losing speed, with its ASEAN neighbours revving up competition.
Like Indonesia, Malaysia too is actively wooing foreign car manufacturers to shift their production there. Already, Honda and Mazda have set up facilities in Malaysia, and other car companies may be following suit, further compounding the risk Thailand will continue to lose out further to its ASEAN neighbours
Minister Kittiratt Na-Ranong said 90 per cent of this year’s Bt400 billion investment budget could be disbursed while the remaining 10 per cent must be approved by the new cabinet. The Board of Investment BoI whose term is due to expire is not authorised to approve new projects at a combined value of over Bt200 million, he said, adding that the private sector has sought promotional privileges at a total value of Bt400 billion.
The private sector is awaiting approvals from the BoI which has asked the Election Commission on solutions to the problem, he said. Somchai Sajjapong, director of the Fiscal Policy Office, informed the meeting that this year’s GDP was earlier projected at 3.5-4 per cent given the failed execution of the Bt2 trillion investment on infrastructure development, pending a ruling by the Constitution Court. The government originally planned to spend Bt40 billion, or 10 per cent of the Bt2 trillion budget, in this fiscal year to kickstart the mega projects, he said.
If the activity prolongs until end of the month, Thailand will lose Bt20-40 billion from consumption and tourism revenues, consequently contributing to growth in Q1 at only 1-2 per cent, he said. Dr Thanavath said the centre projected this year’s growth at 3-4 per cent despite the political stalemate, government’s instability, people’s anxiety and consumption and tourism slowdown. MCOT online news