Uncertainty hits Thailand's growth forecasts

Uncertainty hits Thailand's growth forecasts
Anti-government protesters put a large Thai national flag on the gate and fence of Government House in Bangkok December 13, 2013.

THAILAND - The political upheaval is the biggest stumbling block facing the economy's performance next year, with the worst-case scenario being a failure to hold a general election leading in turn to an absence of growth, according to research houses.

"If the situation worsens, it will get [the economy] into so much trouble," Supavud Chaicheua, managing direc-tor of Phatra Securities Plc, said last week.

Phatra Securities' "flat" forecast growth follows Kasikorn Research Centre's 0.5-per-cent worst-case forecast released last week.

The month-long anti-government protest is still running even though caretaker Prime Minister Yingluck Shinawatra dissolved the House and called for a general election in February.

Three forums have been held in the past four days. The People's Democratic Reform Committee (PDRC) still vows to establish a "People's Council", or interim government.

However, a temporary council has no legitimacy to run the country, Supavud said.

With no government, state-funded projects might not be allowed to proceed, he said.

"Foreign investors have a tendency not to accept this solution," he said, referring to the PDRC's proposal.

The brokerage has lowered its forecast for economic growth next year to 4.3 per cent from 5 per cent on the base-case scenario that the country holds an election.

"We think this scenario has the greatest probability," he said.

The company's research note distributed by Merrill Lynch estimates that in the base case the Pheu Thai Party would be returned to lead the new government with 220 seats, down from 260 in the old government. However, its hold on power would be less secure because of lower popularity. The opposition Democrat Party was expected to win 170 seats, a gain from 150 seats previously.

The new government, expected to be led by Pheu Thai, would face three challenges - administration could be not as easy and smooth as before; Bangkok people do not welcome it; and time must be spent on political reform.

Purchase this article for republication.

BRANDINSIDER

SPONSORED

Most Read

Your daily good stuff - AsiaOne stories delivered straight to your inbox
By signing up, you agree to our Privacy policy and Terms and Conditions.