K-Research warns GDP slip to 2%

K-Research warns GDP slip to 2%

Kasikorn Research Center (K-Research) warned the country's GDP will register at a mere 2% if a new functional government is not set up in the first half of this year.

However, the 2% growth is based on an absence of political violence, said deputy managing director Pimonwan Mahujchariyawong, noting the growth could be cut by 0.5 percentage points if violence does occur.

The research house is maintaining its current economic growth projection at 3% this year.

K-Research wants to wait and see if a clearer picture emerges in the next two months before making an economic review as several legal cases against caretaker premier Yingluck Shinawatra and her cabinet are expected to conclude in March and April, she said.

Earlier, CIMB Thai Bank warned Thailand could slip into a recession in the second quarter for the first time since the global financial crisis, while Somchai Sujjaponse, the Fiscal Policy Office's director-general, said 2014 GDP growth will likely slip below 2% if exports slump.

Bank of Thailand director Don Nakornthab said the country's GDP growth could dip below last year’s 2.9% if the political stalemate persists throughout the year, while an economic recession is possible in the first half only if the situation becomes increasingly violent.

"The merger of the three protest sites into one should help retail business operators around the previous sites, but it will not benefit the overall economy as the political conflicts are lingering," said Mrs Pimonwan.

If the caretaker government revokes the state of emergency, it should bolster the country’s tourism industry in terms of both numbers of foreign visitors and revenue, she said.

But K-Research, a research house under Kasikornbank, ruled out a potential recession, saying growth could improve in the second quarter, largely underpinned by exports. It forecast the country's shipment growth at 5% this year.

SCB Economic Intelligence Center (SCB EIC), a research unit of Siam Commercial Bank, was less optimistic, predicting growth of 2.4% this year, assuming export growth of 5%.

The prolonged political strife is the main risk pressuring the country’s economic expansion.

Domestic consumption and investment could be adversely affected by political uncertainties.

The two research houses also differed on their forecast of the Monetary Policy Committee's policy rate decision.

K-Research predicts the central bank’s rate-setting committee will leave the rate unchanged at 2.25% at the March 12 meeting, while SCB EIC forecasts half a percentage point cut to 1.75%, then maintaining the rate throughout this year.

Do you like the content of this article?
COMMENT