Thailand’s state planning agency predicted a slowdown in economic growth to as little as 4 per cent this year as official figures on Tuesday showed the country grew at its weakest pace for two years in the final quarter of last year.
According to the National Economic and Social Development Board, Thailand’s economic growth decelerated to 4.2 per cent year-on-year in the fourth quarter of 2006, after a military coup overthrew Thaksin Shinawatra, the former prime minister.
On a quarter-on-quarter basis, the economy grew a seasonally adjusted 0.7 per cent, the worst performance since the first three months of 2005, when gross domestic product contracted 0.8 per cent quarter-on-quarter after the Indian ocean tsunami, which devastated Thailand’s crucial tourism industry.
The NESDB predicted the Thai economy – which grew 5 per cent in 2006, up from 4.5 in 2005 – would slow to 4-5 per cent growth this year as the softening global economy reduced potential for export growth and as political uncertainty weighed on investor sentiment.
With Thais jittery about the government’s drafting of a new constitution and fresh elections promised by the end of the year, “the recovery in investment will not be fully fledged”, the NESDB warned.
It also warned that economic growth would be at the lower end of the forecast range unless the military-installed government accelerated budget spending and got planned infrastructure projects off the ground.
“The economic cycle requires the government to step up efforts to promote exports, boost consumption with more budget spending, [and] support tourism and farm product prices to achieve the growth target for 2007,” said Ampon Kittiampon, head of the NESDB.
The grim forecast came as Chalongphob Sussangkarn, a former World Bank official and president of a respected local think-tank, appeared poised to be named the next finance minister. If confirmed, Mr Chalongphob, who holds a PhD in economics from Cambridge university and spent six years as a World Bank economist, will replace Pridiyathorn Devakula, the former central bank governor who unexpectedly resigned as finance minister last week.