* Economists say project delays could cause growth
* Some tourists avoid Bangkok, go to Phuket or elsewhere
* Cbank governor: We need a working government
By Orathai Sriring
BANGKOK, Dec 12 Political unrest in Thailand
that has forced the prime minister to call an early election
could further delay infrastructure projects expected to support
the economy in 2014 and hit tourism, possibly sending the
current account into deficit.
The government has plans to spend 2 trillion baht ($62.3
billion) on infrastructure projects between this year and 2020,
which would boost growth and investment at a time of tepid
Even before the latest political unrest, the projects -
intended to lift GDP by at least one percentage point per year -
have been delayed by legal hurdles.
The opposition has asked Thailand's constitutional court to
decide if it was legal for such huge projects to be funded
off-budget, and the court on Wednesday agreed to hear the case.
Even if the court decides quickly, which is unlikely, there
will be further delay because embattled Prime Minister Yingluck
Shinawatra has called a snap election for Feb. 2, so the plans
have to be put on hold until a new government is formed.
Meantime, the political crisis continues.
"We are currently pencilling in GDP growth at 4.5 percent in
2014, but this is dependent on the government's ability to
execute the infrastructure projects," said economist Gundy
Cahyadi with DBS Bank in Singapore.
"The negative feedback loop from failure to once again
deliver these projects will be significant," he said, adding
that without the boost from public works, growth could again be
below 4 percent next year.
Economist Nuchjarin Panarode with Capital Nomura Securities
said she had expected little support from the projects next year
after earlier delays, and she predicted growth of 3.8 percent
for 2014 after 3.1 percent for this year.
The infrastructure projects include high-speed railways,
highways and mass-transit networks in Bangkok.
A separate 350 billion baht flood management programme has
gone nowhere since being halted by a court in June pending
environmental impact assessments. The programme is meant to
prevent a repeat of 2011's severe floods, which slashed GDP
growth that year to 0.1 percent.
NEEDED: A WORKING GOVERNMENT
Bank of Thailand Governor Prasarn Trairatvorakul has said he
is more concerned about a decision-making vacuum than the level
of public spending.
"The government is a key mechanism to get the economy
going," he told reporters late on Wednesday. "Fast or slow
disbursements will have an impact, as we know, but having a
working government or not is more important."
Protesters who have rallied in Bangkok for weeks want to
oust Yingluck and install an unelected administration. The
movement appears to have little in the way of a policy platform,
especially on the economy.
On Nov. 27, the central bank's monetary policy committee
(MPC) cut its policy rate by 25 basis points to 2.25 percent. It
said the political situation could hurt sentiment, affecting
private spending and tourism, as well as delay public spending
Capital Nomura's Nuchjarin expects another rate cut by March
due to the risks to growth from politics.
GROWTH PROJECTIONS CUT
At the last meeting, the MPC cut its growth projection for
2013 to around 3 percent from 3.7 percent and its 2014 estimate
to about 4 percent from 4.8 percent.
The unrest sent Thai consumer confidence to its lowest level
in nearly two years in November, when the trouble started, and
could scare off foreign tourists in what is the peak season.
Tourism accounts for 8-10 percent of GDP.
"Large tourism-related services receipts have been one of
the few factors propping up Thailand's current account balance.
The loss of this tourism-related buffer could shift the current
account balance back into deficit," J.P. Morgan said in a note
During Bangkok's bloody 2010 political turmoil, tourist
arrivals fell sharply.
This time, 39 countries have issued travel warnings on
Thailand but arrivals rose 5.2 percent in Dec. 1-10 from a year
before, according to the Department of Tourism. That may show a
slowdown after an increase of 21.2 percent from a year earlier
Some tourists appear to be giving Bangkok a miss. Arrivals
at the capital's Suvarnabhumi airport dropped 4.13 percent in
Dec. 1-10 compared with a year before, but jumped 18.5 percent
at the airport on the resort island of Phuket for Dec. 1-8.