* Q1 GDP seen -1.6 pct q/q vs Q4's +0.6 pct
* Q1 GDP seen +0.1 pct y/y vs +0.6 pct in Q4
* 2014 growth projected at 2.0 pct vs 2.9 pct in 2013
* Political turmoil hits demand, tourism; exports weak
By Orathai Sriring
BANGKOK, May 19 Thailand's economy probably
shrank in the first quarter as exports remain weak and domestic
activity has been depressed by months of political unrest, which
threatens to tip the economy into recession.
The country has been run since December by a caretaker
administration with limited fiscal powers and there is no end in
sight to the crisis as protest groups seek to install an
According to a Reuters poll of economists, data on Monday is
expected to show gross domestic product (GDP) in January-March
shrank by 1.6 percent from the previous quarter on a seasonally
On an annual basis, growth was expected to be only 0.1
percent, the worst performance since a contraction in the last
quarter of 2011 when the country suffered devastating floods.
The outlook for the April-June quarter and beyond is grim.
"Chances are we are going to see another technical recession
in the economy, given that the second-quarter GDP number is
likely to be rather poor as well," said Gundy Cahyadi, an
economist with DBS Bank in Singapore.
"The longer the economy is without a functioning government,
the more the drag to economic growth," he added.
The political protests flared up at the start of November.
In the final quarter of 2013, the economy expanded 0.6
percent both on the quarter and from a year before.
Consumer confidence is at a 12-year low, tourists are
staying away from Bangkok and public spending has been delayed.
Many parts of the economy are feeling the pinch, even the
property sector, which proved resilient during previous bouts of
"If the political crisis drags on until the end of this
year, the overall sector could see a contraction of as much as
10 percent," Rutt Phanijphand, chief executive of home builder
Quality Houses, said last week.
AIRLINE 'SEVERELY AFFECTED'
The political turmoil is also hurting Thailand's big auto
sector, which accounts for 11 percent of GDP and is the largest
in Southeast Asia. Domestic car sales are falling and some
30,000 industry jobs have been lost his year.
Thai Airways reported a quarterly loss last week
and expects more red ink in the second and third quarters as "we
have been severely affected by the politics", Chairman Prajin
Tourism accounts for about 10 percent of GDP and visitors
dropped about 5 percent in January-April from a year earlier.
This month, the Tourism Authority of Thailand cut its
forecast for 2014 tourist arrivals to 26.3 million, the lowest
in five years, from 28 million.
Pornthip Hirunkate, vice president of the Tourism Council of
Thailand, said the unrest had probably cost about 100 billion
baht ($3 billion) in tourism revenue so far.
"If the unrest continues into the second half, it will hurt
the late-year high season and we could see layoffs in a sector
that employs more than 3 million people," she added.
EXPORTS TO THE RESCUE?
Some think exports will start to pick up on the back of a
global recovery. So far, the political unrest has been largely
contained to Bangkok and has not disrupted ports and factories.
"There is no problem with orders yet. The unrest has had a
minimal impact on shipments and most exporters are still
confident about business," said Nopporn Thepsitthar, chairman of
the National Shippers' Council. He expects exports to grow 2-3
percent in the second quarter from a year earlier.
Thai Union Frozen Products, the world's largest
canned tuna producer, said its first-quarter net profit rose 40
percent from a year earlier.
In January-March, exports fell 0.8 percent from a year
earlier and about 0.5 percent from the previous three months,
central bank data showed.
In the Reuters poll, the median forecast for economic growth
this year was 2.0 percent, compared with 2013 expansion of 2.9
In October, the central bank forecast 2014 growth of 4.8
percent. Due to the unrest, the forecast has been cut several
times, and a reduction in the current 2.7 percent is likely next
The state planning agency, which compiles GDP data, is
likely to chop its 2014 GDP forecast of 3.0-4.0 percent on
At its last meeting in April, the Bank of Thailand (BOT)
left its benchmark interest rate unchanged at 2 percent
after cuts in March and Novemeber. Most economists
expect no change at the next meeting on June 18.
This month, central bank Governor Prasarn Trairatvorakul
said current monetary policy settings were appropriate.
"Interest rates are not expensive and there is no liquidity
problem. The business sector wants the political situation to
ease and customers' purchasing power to return," he said.
The central bank's private consumption index fell a
seasonally adjusted 0.5 percent in January-March from the
previous quarter and 1.8 percent from a year earlier. Private
investment fell 1.4 percent on the quarter and 6.4 percent on
($1= 32.4 baht)
(Additional reporting by Kitiphong Thaichareon and Manunphattr
Dhanananphorn; Editing by Alan Raybould and Richard Borsuk)