Thai economy shrank 2.1% in first quarter, unrest threatens recession

Don't just blame politics for weak Thai GDP: MBMG
Don't just blame politics for weak Thai GDP: MBMG

Thailand's economy shrank more than expected in the first quarter as exports remained weak and domestic activity was depressed by months of political unrest, which threatens to tip the economy into recession.

The state planning agency, which compiles gross domestic product data, said on Monday there was a 2.1 percent contraction in January-March, compared with the previous three months, while the first quarter shrank 0.6 percent from a year earlier.

The agency, known as NESDB, chopped its 2014 GDP growth forecast to 1.5-2.5 percent from 3.0-4.0 percent.

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A Reuters poll of economists had forecast GDP in January-March to shrink by 1.6 percent from the previous quarter on a seasonally adjusted basis and the economy to have growth of 0.1 percent on an annual basis.

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The country has been run since December by a caretaker administration with limited fiscal powers and there is no end in sight to the crisis as protest groups seek to install an unelected government.

The outlook for the April-June quarter and beyond is grim.

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"Chances are we are going to see another technical recession in the economy, given that the second-quarter GDP number is likely to be rather poor as well," said Gundy Cahyadi, an economist with Bank in Singapore.

"The longer the economy is without a functioning government, the more the drag to economic growth," he added.

The political protests flared at the start of November.

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Consumer confidence is at a 12-year low, tourists are staying away from Bangkok and public spending has been delayed. Many parts of the economy are feeling the pinch, even the property sector, which proved resilient during previous bouts of unrest.

The planning agency revised the figure for fourth-quarter growth to 0.1 percent from the previous three months from 0.6 percent. It left year-on-year growth for October-December at 0.6 percent.