Political protests to take a toll on GDP growth: UTCC
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The Thai economy could expand only 3.3-3.4 per cent, short of the forecast of 3.5 per cent, if the political tensions smoulder till the end of the year, the University of the Thai Chamber of Commerce said.
“The government needs to solve the problem soon, as the political conflict is a key factor in destroying consumer confidence, tourism growth and investment. And it would hit the economy severely,” Thanavath Phonvichai, director of the university’s Economic and Business Forecasting Centre, said yesterday.
Consumer confidence in October plunged to its lowest level in 19 months, amid concern over demonstrations against the blanket amnesty bill.
The Consumer Confidence Index has drifted down for the seventh month from 77.9 points in September to 76.6 last month. Other confidence indices and spending power also fell to their lowest in almost two years.
The expected drag on economic growth would come mainly from the fall of 5-10 per cent of foreign visitors and the loss of Bt10 billion-Bt20 billion from their spending.
The economy next year would expand only 4.8-5 per cent instead of 5.1 per cent.
Based on 1,200 survey responses, if the demonstration is prolonged to the end of this year, and some serious conflict arises, the economy would expand by only 3-3.2 per cent this year, or Bt30 billion to Bt60 billion less than it should have, as arrivals would drop 10-20 per cent.
Economic growth next year would be only 4.8-5 per cent.
In the worst-case scenario, growth could go down to 3-3.2 per cent this year and recover to only 4.5-4.7 per cent next year, if the political mess extends into next year.
The ball is now in the government’s court. It could do its best to calm down the situation if it was still worried about the economy.
“The lower confidence and the current chaos were caused by an unnecessary event. The government needs to fix the situation as quickly as possible. Confidence has dropped to nearly the lowest point of the political turmoil in 2010,” he said.
Saowanee Thairungroj, president of the university, said the poll suggests that the government should withdraw the amnesty bill as the best solution to end the current political strife.
Other possibilities are to amend the draft bill, create a better understanding of the proposed act, conduct a public survey before passing the bill and focus more on economic growth.
Almost 70 per cent of the respondents believe the political confrontations would end if the government kills the bill. About 20 per cent said the protests would disperse if the government revised some details, and almost 10 per cent said the demonstrations would disappear if the government dissolved Parliament.
A survey that had 2,241 responses showed that the lower confidence has led consumers to tighten their purse strings, delaying new investments.
The index for new SME investment has dropped to the lowest in 88 months from 75.5 in September to 72.6 last month.
Any score below the 100 benchmark indicates negative confidence.
The confidence sub-indices for travelling and purchasing a new home also fell to their lowest in 23 months, while purchasing a new car dropped to the lowest in eight months.
The survey by the centre found the index on the political situation sank to the lowest in 29 months at 61.5 points in October, reflecting the very poor outlook that people have for the current situation.
