Political vacuum may plunge Thailand’s GDP to below 2.7%

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Thailand’s economic growth will be below 2.7 per cent if the new government fails to take office in the second half of the year, according to the Bank of Thailand (BoT).

 

Rung Mallikamas, BoT spokesperson, said the failure to set up a new government in the second half of the year will impact public confidence and business revival in the third quarter, and delay national budget disbursement.

The central bank maintains its assessment of the country’s gross domestic product (GDP) at 2.7 per cent so far this year but the political situation must be closely monitored, she said.

On the positive side, overseas orders for the export sector have increased in accord with strengthened export indices worldwide including the US.

She said the BoT was not concerned with the higher prices of commodities following an increase in inflation from 1.9 per cent to 2.11 per cent in March, mainly due to higher cooking gas price.

Food prices have increased but consumers’ demand has declined, she said, adding that general inflation will be at 2.5 per cent, and fundamental inflation at 1.5 per cent which is within the framework of 0.5-3 per cent, she said. 

Ms Rung said the ratio of household debt which increased from 80.1 per cent against GDP in Q3 to 82.3 per cent in Q4 was as predicted due to economic slowdown and people’s decreasing income.

Despite an increase in household debt, debts among financial institutions and non-financial institutions are stable, she said.