Thai economy grows 2.7% in 3rd quarter

In this photo taken Saturday, Nov 16, 2013, tourists prepare to release paper-made balloons, powered by burning oil, rise into the evening sky in Chiang Mai province, some 580 kilometers north of Bangkok during the Loy Krathong Festival. During the festival at night time, Thais float lanterns to the sky and float candles on the lotus-shaped basket into the rivers, in order to drift away their bad luck. Thailand’s economy grew at a lower-than-expected pace in July-September, data showed Monday as the government cut its forecast for the year while analysts warned political turmoil could inflict further damage. AP

BANGKOK—Thailand’s economy grew at a lower-than-expected pace in July-September, data showed Monday as the government cut its forecast for the year while analysts warned political turmoil could inflict further damage.

On a year-on-year basis, gross domestic product (GDP) expanded 2.7 percent in the third quarter of 2013, weaker than the adjusted 2.9 percent in April-June, the National Economic and Social Development Board (NESDB) said.

It was the third straight quarter of slowing growth in the kingdom, and came on the back of a drop-off in consumer spending, the board said, although the economy did benefit from a surge in tourist arrivals and increased state spending.

Economists polled by The Wall Street Journal forecast growth at 2.95 percent.

The economy expanded 1.3 percent in the period quarter-on-quarter, the government agency said, ending a run of negative growth stretching back to January, when the economy contracted by a revised 1.6 percent.

3% growth forecast for 2013

The NESDB projected the Thai economy “is likely to grow by 3.0 percent” in 2013, lower than the 3.8-4.3 percent forecast in August.

“In 2014, the Thai economy is expected to grow in the range of 4.0-5.0 percent,” it added, on the back of a global economic recovery and massive state spending on infrastructure. The economy grew 6.5 percent in 2012.

But with anti-government protests entering a third week on Monday, experts said the specter of political unrest could impact growth.

Critics of Prime Minister Yingluck Shinawatra have held daily rallies after a botched attempt by her administration to push through a political amnesty bill that would have allowed her brother—and former premier—Thaksin to return from self-exile.

“As long as protests remain peaceful, the impact on GDP will be short-lived and small,” experts at Capital Economics said in a briefing note.

“However, there is a risk of prolonged and violent unrest,” they said, adding any repeat of clashes seen in 2010 would likely batter the kingdom’s crucial tourist industry.

Thailand’s household consumption dropped by 1.2 percent on the previous year, the NESDB said in the statement, on the back of lower farm incomes and the expiry of a government rebate for first-time car buyers.

However, the kingdom’s tourism sector grew 26.1 percent year on year, boosting hotel occupancy rates and restaurant takings.