Tue, May 25, 2010 page11

• Thai economy grows, but unrest will hurt: official

  PAYING THE PRICE The planning agency said instability at home, combined with the fallout from Europe’s debt woes, would keep this year’s growth well below potential

  • AP AND AFP
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  Thailand’s economy grew at its fastest pace in 15 years in the first quarter as exports recovered, but the country’s worst political violence in decades is likely to crimp expansion over the rest of the year.

  GDP expanded 12 percent over a year earlier in the January-March quarter, boosted by the global economic recovery, the government’s economic planning agency said yesterday.

  Despite calling the first quarter “outstanding,” the National Economic and Social Development Board (NESDB) left its growth forecast for the year unchanged at a range of 3.5 percent to 4.5 percent, citing political instability and risks to the global economy from Europe’s debt crisis.

  In the first quarter, every engine of the economy — tourism, exports, consumption and private investment — powered along.

  “Confidence had returned and our economy was back on track, and I feel very regretful about these events,” NESDB secretary-general Amphon Kittiamphon said about the two months of protests.

  “The Thai economy had the potential to grow 6 to 7 percent [in 2010] because private investment was continuing and confidence had been restored,” he said. “But because of the protests and riots, the NESDB still maintains its growth forecast for the year of 3.5 percent to 4.5 percent.”

  Thai Prime Minister Abhisit Vejjajiva said he would reach out to international investors to try to convince them the country’s economic fundamentals remain strong.

  “The Thai economy has repeatedly experienced crisis and managed to revive, but whether it can achieve that this time or not depends on our people,” he told reporters.

  Bangkok regained a semblance of normality yesterday after an army crackdown last week to clear the city’s commercial district of thousands of “Red Shirt” protesters sparked deadly street battles and arson attacks on nearly 40 buildings including the stock exchange and country’s biggest shopping mall.

  The NESDB said the unrest would hit tourism, slow household spending and private investment, and cause delays in government spending.

  The number of tourists this year is likely to fall short of the 16 million target by 3 million, which would represent an 8 percent fall from last year, the agency said.

  Revenue from tourism will be about 113 billion baht (US$3.5 billion) short of expectations.

  There could also be a surge in foreign money fleeing the stock exchange and other capital markets, NESDB said.

  Thai stocks were down 2.4 percent yesterday despite gains in most other Asian markets. The stock exchange was forced to close after a half-day session on Wednesday when it was targeted by arsonists and stayed closed on Thursday and Friday, when global stocks were diving on worries Europe’s debt problems would undermine global growth.

  There are fears, meanwhile, that the political crisis in the region’s second-largest economy will worsen despite the latest unrest being put down.

  “Right now, they are just burning buildings, but later on, what if they picked up arms to fight the bureaucrats, security forces in other parts of Bangkok, and especially in the countryside?” said Thitinan Pongsudhirak, a political science professor at Chulalongkorn University in Bangkok.

  “The crackdown didn’t make them retreat fully. Things will get much worse still,” he said.
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