Stumbling Thai economy lends urgency to junta's revival efforts

BANGKOK Thu May 29, 2014 8:41pm EDT

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BANGKOK May 30 (Reuters) - Thailand is expected to publish data on Friday showing stagnant consumption and investment, more evidence of a stumbling economy that will lend urgency to the military junta's efforts to get the country working again.

Southeast Asia's second-biggest economy has been battered by political turmoil since late last year when protesters backed by the royalist establishment launched a bid to oust the government of Prime Minister Yingluck Shinawatra.

The government hung onto power even after a court forced Yingluck out of office for abuse of power on May 7, but the military ousted it in a coup on May 22, saying a takeover was necessary to restore order and prevent more violence.

Military rulers have held out little hope for early elections despite calls from the United States and other allies for a quick restoration of democracy.

Army chief and coup leader General Prayuth Chan-ocha has spoken of the need for broad reforms before an election. Another top officer said on Thursday conditions had to be right and divisions healed before a return to civilian rule.

Thailand has become polarised between supporters of Yingluck and her influential brother, deposed premier Thaksin Shinawatra, and the royalist establishment that sees Thaksin and his populist ways as a threat to the old order.

Despite the animosity of the elite and the Bangkok middle class, Thaksin's popularity in the rural north and northeast has ensured that he or his allies have won every election since 2001.

Gross domestic product shrank 2.1 percent in the first quarter of 2014 as the lengthy anti-government protesters damaged confidence and scared off tourists. Friday's private consumption and investment data for April are likely to show the depression continued into the second quarter.

Data on Wednesday showed factory output fell for the 13th straight month in April, imports plunged and exports remained weak, underscoring the difficulty the military government faces in averting recession.

'PRESSING TASK'

Navy commander Admiral Narong Pipattanasai, the junta member overseeing tourism, told reporters on Thursday that 26 million people were expected to visit this year, down from a targeted 28 million, because of the unrest.

He said revenue from tourism was expected to drop to 1.8 trillion baht ($55 billion). The authorities had been banking on 2 trillion.

"We will do our best to improve the situation," Narong said. "The next pressing task is to build confidence among tourists and to show them that they can travel in Thailand freely ... through campaigns and other methods."

Tourism accounts for about 10 percent of the economy. Many foreign governments have issued warnings about travelling to Thailand, which can affect insurance cover.

Narong said a nationwide night-time curfew, imposed on the day of the coup for seven hours but cut to four hours on Wednesday, could be shortened again in tourist areas. Even in Bangkok, the curfew is not being strictly enforced.

Despite martial law and a ban on gatherings, small protests against the military takeover have been held daily in Bangkok, and for a day or two after the coup in the northern city of Chiang Mai.

The protests have been rowdy and tense at times but there has been no serious violence. Tourist resorts have been unaffected.

The National Council for Peace and Order, as the military junta is formally known, has imposed rigorous security and censorship, detaining more than 200 people including Yingluck and ministers of the ousted government though she and many other detainees have been released.

The military has warned about the spread of what it calls provocative information on social media and will send officials to Singapore and Japan in coming days to seek tighter censorship of social media from Facebook, Google Inc and instant messenger service Line, a government spokesman said. ($1 = 32.7750 Thai Baht) (Reporting by Bangkok bureau; Writing by Robert Birsel; Editing by Alan Raybould and Michael Perry)

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