Thailand has dodged recession as its economy grew 0.9 percent in the second quarter, data showed yesterday, after the military ended months of political deadlock with a coup and promised to unshackle state spending.
From April to June the economy grew 0.9 percent after shrinking a revised 1.9 percent in the first quarter, Thailand’s National Economic and Social Development Board said.
The junta, led by Royal Thai Army Commander-in-Chief General Prayuth Chan-ocha has pegged its legitimacy on improving the economy after months of political protests paralyzed government spending, scared off tourists and battered consumer spending.
Photo: Bloomberg
Since seizing power on May 22, Prayuth has opened Thailand’s state coffers — kick-starting stalled investment projects and paying debts to rice farmers to help spur agriculture.
On a year-on-year basis, the economy grew 0.4 percent after contracting by 0.6 percent in the previous quarter, the board said.
Despite the positive momentum, the board cut its growth outlook for this year, forecasting 1.5 to 2 percent expansion, down from a previous estimate of 1.5 to 2.5 percent.
The board said the political turmoil of the first five months of this year would likely cause the economy to “perform below its potential” over the full year, with tourism numbers and car sales still disappointing.
The lucrative tourism sector was hammered by the protests and subsequent military takeover, with visitor numbers down just over 12 percent year-on-year.
However, Thai tourism officials have been at pains to reassure visitors that the country is safe, despite the retention of tough martial laws across the kingdom.
Yesterday, an army-appointed National Legislative Assembly began the process of agreeing a budget for next year, raising hopes it would free up more government spending.
Analysts expect domestic demand to creep back as the junta’s policies kick in.
“Growth prospects have brightened since the military takeover, which reduced political uncertainties and restored relative peace to the country,” Capital Economics analysts said in a briefing note.
“Nonetheless, the economy continues to face several headwinds, such as high household debt burdens. As such, growth is unlikely to return to its trend rate anytime soon,” the note said.
The kingdom had enjoyed a reputation as “Teflon Thailand” for its enviable record of economic resilience in the face of the last eight years of political upheaval as well as devastating floods in 2011.
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