Thailandâ??s Economic Growth Slows on Exports, Protests

[Bangkoktraveler]

Thailandâ??s economy slowed more than expected in the third quarter as exports cooled and violent political protests quashed domestic spending.

 

Gross domestic product grew 4 percent from a year earlier after a 5.3 percent gain in the second quarter, the government said today in Bangkok. Growth was estimated to be 4.3 percent, according to the median estimate of 19 economists surveyed by Bloomberg News.

 

â??The lower-than-expected number signals the possibility of an accelerating slowdown,â? said Usara Wilaipich, an economist at Standard Chartered Bank Plc in Bangkok. â??Exports will be hurt by the global economy while consumer confidence and investment will probably weaken because of political uncertainty in Thailand.â?Â

 

Thousands of protesters surrounded parliament today, adding to pressure that has hampered the governmentâ??s efforts to stimulate the economy by increasing spending. The central bank may lower interest rates next week as the global recession prompts companies from Thai Airways Pcl to General Motors Corp. to consider cutting jobs.

 

Thailandâ??s economy may expand as little as 3 percent next year, the slowest pace in eight years, the governmentâ??s National Economic and Social Development Board said today. Thatâ??s lower than the central bankâ??s lowest estimate of 3.8 percent.

 

â??Below 3 Percentâ??

 

â??Growth may go below 3 percent next year if the government canâ??t function properly,â? said Ampon Kittiampon, secretary- general of the board. â??We need the government to run at full speed if we want to survive.â?Â

 

Economists in a Bloomberg survey expect growth of 3 percent in 2009. GDP will expand no more than 4.5 percent this year, the board predicted today.

 

The central bank should consider cutting its interest rate from a 19-month high of 3.75 percent because risks to economic growth have overtaken inflation concerns, Deputy Governor Bandid Nijathaworn said Nov. 11. Policy makers next meet on Dec. 3 to decide on borrowing costs.

 

â??We are expecting a rate cut and we are expecting rates to be cut over the coming quarters,â? said Thomas Harr, a senior currency strategist in Singapore at Standard Chartered Plc.

 

The SET Index of stocks is on course for its worst year since the 1997 financial crisis. Consumer confidence is at the lowest level in a year and the baht is close to its weakest level against the dollar in 20 months as exports and tourist arrivals slow and foreign investors sell the nationâ??s assets.

 

Lowering Taxes

 

The government has cut taxes, increased state-controlled bank-lending, waived some of the cheapest public transport fares, exempted low-use households from some utility charges, and plans increased spending to spur consumption. More tax reductions will be implemented by December, Finance Minister Suchart Thadathamrongvej said today.

 

â??We donâ??t know how effective the budget disbursement will be,â? said Thanomsri Fongarunrung, an economist at Phatra Securities Pcl in Bangkok. â??It will take some time to get into the economy.â?Â

 

GDP expanded a seasonally adjusted 0.6 percent in the third quarter from the previous three months, when it grew a revised 0.8 percent, according to todayâ??s statement. Economists surveyed by Bloomberg expected a 0.4 percent expansion.

 

Thailandâ??s exports, which account for about 70 percent of GDP, rose 25.5 percent in the third quarter from a year earlier, slowing from the previous three monthsâ?? 26.3 percent pace, and tourist arrivals fell 1.7 percent, according to the central bank. Singapore, South Korea and Australia warn against non- essential travel to Thailand because of political protests.

 

â??Political Uncertaintiesâ??

 

â??Fiscal and monetary policies may be able to spur local demand but if the global economy continues to contract, we will not see the Thai economy weather the storm that well,â? said Carl Rajoo, an economist at Forecast Singapore Pte, before todayâ??s announcement. â??The problem with Thailand is there are still political uncertainties swaying investorsâ?? confidence.â?Â

 

General Motors Corp. will cut 8 percent of its Thai workforce and halt production for a month from mid-December, the largest U.S. automaker said Nov. 20. About 70 percent of its Thai output is exported.

 

Thai Air, the nationâ??s biggest carrier, said Oct. 8 that it may eliminate jobs and flights as passenger traffic slides. Kasikornbank Pcl, Thailandâ??s No. 4 lender by assets, expects 2009 loan growth to be the least in four years.

 

Disrupting Government

 

Private consumption rose 2.6 percent from a year earlier in the quarter, after gaining a revised 2.5 percent in the second quarter. Total investment in the third quarter increased 0.6 percent from a year earlier, slowing from 1.9 percent in the previous three months. Manufacturing expanded 4 percent, from a revised 5.3 percent pace in the previous three months.

 

Bangkok-based protesters say they plan to step up efforts to disrupt the government until it falls after a Nov. 20 grenade explosion killed one activist and injured 19 others. At least five people have died as a result of the protests since August.

 

Suspected separatists in the Muslim-majority south killed one and injured 71 in Nov. 4 bomb blasts. More than 3,300 people have been killed in three provinces bordering Malaysia since January 2004.

 

The Bangkok-based anti-government group, which spearheaded protests that led to a September 2006 coup that toppled then Prime Minister Thaksin Shinawatra, claim the administration elected in a December poll is a stand-in for the former premier. Thaksin fled three months ago to avoid corruption charges.

 

Somchai Wongsawat, Thaksinâ??s brother-in-law, leads the government.

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[Faustian]

Must be wrong, the PM said everything is ok.

[Torneyboy]

I believe him..