Thai economy likely to suffer further with Yingluck toppled and political stand-off continuing

The gridlock that has stalled Thailand’s government has sent consumer confidence to a near 13-year low and credit ratings companies have warned that prolonged political unrest threatens to damage an already fragile economy.

The governing stalemate remains the biggest risk to Thailand’s economy, which expanded 2.9 per cent last year, central bank governor Prasarn Trairatvorakul said. The University of the Thai Chamber of Commerce   released data that showed consumer confidence slipped for a 13th straight month in April. Moody’s Investors Service and Standard & Poor’s said  Yingluck Shinawatra’s removal as prime minister was “credit negative” because it may prolong the political crisis and worsen violence that has already led to 25 deaths since late November.

“I think there is a good chance we won’t see any growth rebound towards the year end,”  DBS Bank economist Gundy Cahyadi said. “Pressure definitely will be apparent in markets, given the possibility of a credit rating downgrade. And should that happen, one will also start to get worried about potential implication for long-term investors.”

Yingluck, 46, was forced to step down on Wednesday after the Constitutional Court found her guilty of abusing her power in office and may be banned from politics for five years after the nation’s anti-graft agency said the Senate should impeach her for failing to stem losses from a government subsidy programme.

The National Anti-Corruption Commission (NACC) ruled that she was derelict in her role overseeing a rice-subsidy programme that cost as much as US$21 billion according to government estimates.

“Yingluck failed to prevent or stop fraud in the rice-buying programme even after the NACC and other government agencies sent letters to warn her,” Commissioner Vicha Mahakun said.