Negative growth seen for Q1

Dr Roong Mallikamas, spokeswoman of the BOT, said the latest political developments continued to create high uncertainty for the economy and it was most likely that gross domestic product (GDP) growth from the last quarter of 2013 to the first quarter of 2014 would be negative.

The National Economic and Social Development Board (NESDB) will announce the first-quarter GDP figure on Monday.

Roong said the economic slowdown would have only a small impact on the currency market, as the market was well aware of the situation and had absorbed some of the effects from the slump already.

“The baht is still in the cluster with other countries in the region, but it has been a little bit lower than the others in the past two to three weeks, which is nothing alarming,” she said.

In terms of the country’s CDS level, she said that the ratings of the surrounding countries such as Malaysia and Philippines had decreased but Thailand’s rating had remained stable. While the spread had widened, it was considerably small and not related to the political uncertainty.

Roong revealed that between April 10 and May 9, Malaysia and Philippines’s CDS levels had fallen from 97 and 98 respectively to 93.5 due to an international trend that saw a decreased risk in emerging markets.

As for the bond market, Roong said that capital flow continued as normal despite the political uncertainty, the holding ratio had not fallen and the issue level remained stable.

“The government can still issue bonds. There is no change in this aspect while the amount of bond supply has been lowered since some private investment has been delayed but not because of the increased uncertainty,” she said.

In a related matter, the cost of loans from abroad has increased recently due to the increased association with the political uncertainty but it will not shock cash flow in the system since the cost has only risen by a marginal rate, Roong said.