UTCC: Political disorder could sap GDP growth
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Gross domestic product could post only 3.8-per-cent growth this year, down from a forecast of 4.3 per cent, if the current political tension escalates to severe disorder, according to the University of the Thai Chamber of Commerce.
Under the worst-case scenario, the UTCC expects growth to drop by 0.5 percentage point if political unrest causes lower confidence on spending, investing, and travelling.
Thanavath Phonvichai, director of the UTCC’s Economic and Business Forecasting Centre, said that if political protest were prolonged into the fourth quarter and created a feeling that the country was unsafe, tourism, trading and investment would be hit hard.
A UTCC survey also showed that the Consumer Confidence Index (CCI) declined to the lowest level in seven months in July in light of dimmer economic and political outlooks. This is the fourth straight monthly decline.
Last month, the CCI went down from 81.6 points in the previous month to 80.03 (scores below 100 indicate low confidence). The survey found that all indices showed a decline. This followed the Bank of Thailand’s lowering of its 2013 economic-growth forecast in light of increasing global uncertainties and the oil spill in waters off Rayong.
Political concerns after the imposition of the Internal Security Act and the anti-government rally also put downward pressure on confidence.
Under the second scenario, if the situation drags on into the fourth quarter but with no violence, GDP grow by 4.0-4.1 per cent. In the best scenario, the political movement would end peacefully within three months, and then GDP growth would drop by only 0.1-0.2 percentage point to 4.1-4.2 per cent.
In the UTCC’s survey of 1,194 respondents, about 45 per cent expressed high concern about the political situation. Another 49 per cent showed little concern, and about 6 per cent no concern at all.
Most consumers said the political tension could affect their spending and tourism. However, more than 70 per cent foresee that the anti-government rallies will be acceptable if participants limit their activities and the length of the protests and do not cause any harm.
Many think all involved will be able to negotiate a solution, and that a central committee could settle the conflict.
