* Consumer confidence at 12 1/2 year low
* Thailand expected to post slowest GDP growth in Asia
* PM's survival rests with courts as cases pile up
* Stimulus plans halted, FDI delayed, tourism hit
By Pairat Temphairojana and Khettiya Jittapong
BANGKOK, April 14 The golden Buddha statues,
amulets and lucky charms that festoon Sakuntala Mettawong's tiny
Bangkok cellphone shop are not helping business.
It's peak time, but customers are scarce at the usually
bustling mobile phone bazaar in the MBK Center, which sits on
the fringe of a mile-long cluster of gleaming malls that
symbolise the rapid growth of Thailand's consumer class.
"Business has been very bad. Many shops have left here, some
moved to find cheaper spots or changed hands," said Sakuntala,
almost drowned out by the noise of bored shop owners playing
computer games behind her.
"The top phone models are more difficult to sell ... more
people are selling their phones back to shops, to use simple
ones, or sell because they need money."
An economy known for its dynamism is ailing, headed towards
recession and held hostage by another crippling bout of turmoil
in an eight-year power struggle being fought in Bangkok's
commercial heart and in its politicized courts.
The intractable crisis centres on the political dominance of
the billionaire Shinawatra family, and the slim prospect of a
resolution has been sapping consumer confidence, which sank in
February to a 12 and a half-year low.
Economists say five months of sporadic violence and
anti-government blockades that have scared off tourists could
cost 300 billion baht ($9.3 billion) in lost revenue.
Some businesses fear the Teflon coating on what's for years
been one of Asia's most resilient economies could finally be
"Consumers have no mood to spend. We've seen demand falling
in every segment of our products," said Boonkiat Chokwatana,
chairman of consumer product distributor I.C.C. International
Pcl, which saw first-quarter sales fall 20 percent.
"In more than 43 years in business, we've never needed to
cut our costs, even during the 1997 financial crisis. This year
the situation is quite critical."
With legal cases stacking up against Prime Minister Yingluck
Shinawatra, the confrontation pitting royalists, tycoons and
scions tied with the old and new political orders against each
other could get much worse.
Yingluck's mostly rural, working class supporters are
convinced powerful forces in Thailand's establishment are
conspiring to overthrow her, most likely via a court ruling, and
they have vowed to fight back.
The outlook for the economy looks just as grim, with some
economists forecasting growth of less than 2 percent or even
contraction if growth of exports, worth 60 percent of gross
domestic product, falls short of the 4.5 percent forecast by the
The International Monetary Fund (IMF) last week projected
growth of 2.5 percent this year, the slowest among Asian
economies and less than the 2.7 percent seen by the Bank of
Thailand following two revisions since October, when tension
Thailand's credit-hungry consumers are paying the price,
with household debt at the end of 2013 hitting a record at 82.3
percent of GDP, compared with 77.3 percent a year earlier and 45
percent a decade ago.
"We're not aggressive on loan growth this year," said Siam
Commercial Bank president Kannikar Chalitaporn. "We'll
offer (clients) any assistance to prevent loans from turning
into bad debt."
The Thai Industries Sentiment Index in February hit its
lowest since July 2009, interest in buying property is at its
lowest in almost nine years, while domestic auto sales dropped
nearly 45 percent in February from a year earlier, after a
similar drop in January.
The central bank has cut the benchmark interest rate by 25
basis points to 2.0 percent, the lowest since December 2010 and
expects the economy to shrink. If that trend continues for
another quarter, Thailand would be in recession for the first
time since early 2009.
"There's a huge risk of technical recession in Thailand,"
said Gundy Cahyadi, an economist at DBS Bank in Singapore.
"Export growth remains the only support right now, but this
alone can't hold up the economy for too long."
Central bank chief Prasarn Trairatvorakul last week said a
big rate cut wouldn't help the economy plagued by both a lack of
confidence and a policy vacuum.
Parliament remains empty after a Feb. 2 election was
disrupted, leaving Yingluck heading a caretaker government.
The Constitutional Court has not helped. It has ruled
consistently against Yingluck's party, annulled an election it
probably won and declared illegal a 2 trillion baht ($62
billion) infrastructure spending plan.
The Board of Investment says projects worth about 660
billion baht have been on ice, awaiting approval by a new
committee the caretaker government has been unable to appoint.
The government is at its weakest and any administration that
replaces it is almost certain to face the same kind of
opposition, meaning many more months of weak business for
retailers, the tourism sector and exporters.
Hotel occupancy has been hovering at about 50 percent, down
from the usual 80 percent and exports grew just 0.2 percent in
the first two months compared with a year earlier.
TISCO Bank Pcl cut its forecast for domestic car
sales this year to about 900,000 vehicles from 1.1 million-1.2
million, even with a host of zero-interest loans offered by car
Some Thai companies are looking to expand abroad. Handset
distributor Jay Mart Pcl said it may revise its
target of 35 percent growth this year and aimed to tap high
demand in neighbouring Myanmar, as Thailand's appetite for
top-end smartphones sags.
According to market research group Gfk, consumers have been
choosing cheaper models from Nokia and iMobile since
the protests began, with Apple's sales down from
127,000 units in November to 100,600 in February.
"People are in the mood for shopping," said Kridchanok
Patamasatayasonthi, managing director of homes and furniture
firm Index Living Mall.
"They don't know what's going to happen, or whether we're
going to have riots in the city ... they want to make sure they
don't overspend right now."
(Additional reporting by Manunphattr Dhanananphorn and Orathai
Sriring; Writing by Martin Petty; Editing by Robert Birsel)