Thailand cut its growth forecast for the year after the economy expanded less than analysts estimated last quarter and as weakening exports damp the outlook for consumption and investment.
Gross domestic product rose 1.3 percent in the three months through September from the previous quarter, the National Economic & Social Development Board said in Bangkok today. It revised a contraction in the second quarter to no growth from the previous three months. GDP grew 2.7 percent from a year earlier, compared to a median estimate of 2.9 percent in a Bloomberg survey of 15 analysts.
Prime Minister Yingluck Shinawatra’s administration has tried to speed up budget disbursement and boost local demand as plans to spend 2 trillion baht ($63 billion) on infrastructure and 350 billion baht on water management projects have stalled. Consumer confidence in October fell to the lowest level in 20 months as protests grew against a bill that would have provided amnesty for political offenses stretching back to the nation’s 2006 coup, allowing the return of her exiled brother Thaksin.
“Confidence appears to have taken a hit at least partly from the protests, and personal consumption looks to have weakened further in the fourth quarter so far,” said Gundy Cahyadi, an economist at DBS Group Holdings Ltd. in Singapore. “We need to see if external demand picks up in 2014 and offsets some of the drag in the domestic economy. The government’s infrastructure spending is now more crucial than ever.”
The baht was little changed at 31.58 per dollar as of 11:07 a.m. local time. It is among the worst performers in the last three months of 11 Asian currencies tracked by Bloomberg. The benchmark SET Index gained 0.4 percent.
The state agency cut its full-year expansion forecast to 3 percent from a range of 3.8 percent to 4.3 percent projected in August, and said the economy may grow 4 percent to 5 percent in 2014. It said it expected no export growth this year, from an earlier estimate of 5 percent.
Household consumption fell 1.2 percent last quarter from a year earlier, the NESDB said. Public investment slumped 16.2 percent from a year ago as both government construction and investment in machinery and equipment declined, it said.
“The political-risk factor normally hurts tourism,” Arkhom Termpittayapaisith, secretary-general of the state planning agency, told a news conference today. “So far we haven’t seen any impact on the economy.”
Demonstrations that have drawn as many as 30,000 people have already hurt tourism and investor confidence, central bank Governor Prasarn Trairatvorakul said Nov. 10. The Bank of Thailand last month held its benchmark interest rate at 2.5 percent for a third meeting. It is due to meet next on Nov. 27.
Prolonged unrest could shave 0.5 percentage points from the nation’s GDP in 2014, according to a BNP Paribas SA research note on Nov. 4. Thai Airways International Pcl, the nation’s largest airline, has started to see passengers delaying plans to travel to Thailand, President Sorajak Kasemsuvan said Nov. 12.
“A part of the reason for the disappointing GDP data is the delay in government investment in projects such as water management,” said Finance Minister Kittiratt Na-Ranong. “A rebound in global economic growth will help stimulate exports.”
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