Political unrest may drag Thailand’s economic growth below 3%

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The months-long turmoil in Thailand will possibly shave this year’s economic growth to less than the projected 4 percent, the central bank announced last week.

Rung Malikamas, spokesperson for the Bank of Thailand (BoT), said the bank will officially release its 2014 economic projection in March after having wrapped up economic assessment for the fourth quarter of last year.

She said disbursements in the public sector will dwindle if the political stalemate continues and the general election is not held as scheduled.

The caretaker government repeatedly stood firm on holding the snap poll on Feb 2 despite widespread protests and election registration failures in a number of southern provinces.

Ms Rung said the disbursement delay for immediate expenses and failure to start the budgeting process for the 2015 fiscal year will have both a direct and an indirect impact on the private sector, and add volatility to the 2014 overall economy.

This year’s economic growth may barely reach only 3 percent, with inflation at 2.4 percent, she said, hopefully predicting a strengthened economy later this year given improved confidence and consumption in the private sector.

The domestic political situation and public spending will be the two major elements, she said.

She said the global economy will improve this year especially in the US where successive investment will contribute to Thailand’s export growth.

The flow of foreign capital in Thailand remains stable and foreign investors should eventually return to the kingdom which promises strong fundamentals in the private sector along with solid performance of commercial banks and expanded per capita income, she said.

She said the economic slowdown is short term, or only during the political conflicts.