Thai economic growth slumps at end of 2013

Political unrest clouds outlook after expansion loses momentum towards the end of 2013

PUBLISHED : Monday, 17 February, 2014, 2:22pm
UPDATED : Tuesday, 18 February, 2014, 2:26am

Thailand's economic growth slowed significantly in the final quarter of last year, and the state planning agency cut its forecast for this year because of political unrest that could prevent the formation of a fully functioning government for months.

Southeast Asia's second-biggest economy, after Indonesia, grew a seasonally adjusted 0.6 per cent in the quarter from the previous three months. That matched a forecast from economists in a poll but was well below the previous quarter's 1.3 per cent pace.

The economy also expanded 0.6 per cent from the final quarter of 2012, compared with the poll forecast of 0.4 per cent and the previous quarter's 2.7 per cent.

For the full year, the agency said growth was 2.9 per cent, far below the 6.5 per cent expansion in 2012, when Thailand was rebounding from devastating floods in the preceding year.

The planning agency slashed its growth estimate for this year to between 3 per cent and 4 per cent from the 4 to 5 per cent it forecast in November, when anti-government protests began in the capital of Bangkok.

The government tried to end the crisis by moving in December to hold a snap election. That took place on February 2 but was disrupted, meaning there is no quorum in parliament to form a government, so a caretaker administration remains in place, with only limited spending and borrowing powers.

The protests have forced many ministries and state agencies to close, including the planning agency itself, which published a truncated economic statement on Monday.

Built into its forecasts for this year is a pickup in investment in the second half of the year, but it acknowledges that the budgeting process for the financial year starting in October will be disrupted.

"Only some parts of the [financial] 2015 budget can be disbursed within the first quarter of the [financial] year," it said, referring to the fourth quarter of this calendar year.

The Bank of Thailand's Monetary Policy Committee next reviews the policy rate on March 12, and many economists expect further easing to help the economy.

KGI Securities economist Pragrom Pathomboorn said he expected a cut of 25 basis points at that meeting to 2 per cent.