Economists are putting their forecasts for Thailand under the knife after the economy contracted more than expected in the first quarter amid continued political turmoil.
"Investment has taken a big hit. Investors have really lost confidence in the country," Daniel Martin, an economist at Capital Economics, told CNBC Monday. The political situation may have become more tense, with the military declaring martial law early Tuesday. An announcement on military-run television was made to "restore order" and was not a coup, Agence France Press reported.
"Even though the crisis doesn't seem to have affected the way of life around much of the country, consumers have really lost confidence as well," Martin said before the release of data Monday showing Thailand's gross domestic product (GDP) contracted 2.1 percent from the previous quarter, worse than the 1.6 percent contraction forecast in a Reuters poll of economists.
"Unless a resolution to the political crisis is found soon, GDP growth in the second quarter may not be much better," Capital Economics said in a note after the data's release.
Political deadlock has gripped Southeast Asia's second-largest economy after Indonesia since late last year. Following months of political turmoil, Thailand's Constitutional Court ruled to remove Prime Minister Yingluck Shinawatra earlier this month.
The Election Commission has thrown cold water on hopes an election scheduled for July 20 will go ahead. The Senate is considering appointing an unelected interim government, a move likely to inflame tensions with the elected government's supporters.