Thailand's first-quarter GDP is likely to have shrunk by up to 2% from the previous quarter, as the political unrest has added more woe to already-waning domestic consumption and investment, economists say.
GDP growth in the second quarter is expected to pick up slightly, but there are concerns over export growth as the political vacuum hits economic confidence.
TMB Analytics economist Warapong Wongwachara forecasts GDP in the first three months will contract by 1-2% quarter-on-quarter, registering flat year-on-year growth.
He said economic growth this quarter is expected to bounce back to just above zero year-on-year as the export recovery gains traction.
TMB Analytics had predicted full-year economic growth of 2.9% on the assumption of a functioning government being in place by the third quarter.
But the research house will tentatively cut its forecast to less than 2% growth due to downside risks stemming from the political vacuum.
Export growth this year, currently forecast at 4%, also looks set to come in lower after first-quarter exports disappointed and farm commodities underperformed, Mr Warapong said.
Charl Kengchon, managing director of Kasikorn Research Center (K-Research), said Thailand's first-quarter GDP probably shrank by 1.8% on a quarterly basis due to weak private consumption and investment, lengthy political uncertainty and downbeat export growth.
Regardless of a decline in manufacturing, first-quarter GDP is likely to grow by 0.7% year-on-year on the back of a higher surplus in net exports compared with a year earlier, he said.
The National Economic and Social Development Board will announce its official first-quarter GDP data next Monday.
GDP growth is expected to pick up slightly in the second quarter, with near-zero growth quarter-on-quarter and 0.8% growth year-on-year on the back of a rebound in exports, Mr Charl said.
Exports usually recover on a seasonally adjusted basis in the second quarter after Chinese New Year.
K-Research expects first-half GDP growth of 0.8% year-on-year, assuming that the protests remain peaceful.
Mr Charl said there were greater downside risks to economic growth from political uncertainty, as it was unclear whether negotiations would take place and how the protests would unfold after the Constitutional Court and the National Anti-Corruption Commission delivered unfavourable rulings for the government.
Apart from the political stalemate, the export growth outlook is another question mark for economic growth this year, he said.
K-Research forecasts full-year GDP growth of 1.8%, down from 3% predicted earlier, on the basis that there will be no functioning government with the authority to carry out economic policy.
Meanwhile, exports are projected at 5% this year, down from an earlier 7%.
Usara Wilaipich, a senior economist at Standard Chartered Bank, said first-quarter GDP is expected to contract by 1.4% quarter-on-quarter amid the prolonged political stalemate and lapsing stimulus measures.
Second-quarter economic growth is projected to stabilise at 1.7% from the previous quarter thanks to an export recovery and improvements in manufacturing production and business confidence, she said.
Ms Usara said a technical recession has a minimal chance of occurring, as the global economic recovery should help to support Thai growth.
Standard Chartered expects full-year economic growth of 3.5% based on the prospect of having a functioning government by September while projecting 9% export growth on improved global demand.
