Prolonged Thai impasse to dent demand, growth

Bangkok, March 29 | Updated: Mar 30 2006, 05:37am hrs
Thailands political crisis has paralysed decision-making in business and caused domestic demand to waver. Now, with the uncertainty nowhere near over, economists are considering a new round of cuts to their growth forecasts.

For weeks, no one has been able to plot with any certainty the course of the crisis surrounding Prime Minister Thaksin Shinawatra, accused of corruption and abuse of power. The anti-Thaksin campaigners appear to have failed to stop the snap election he called for April 2 to show who has popular support, and no one knows what will happen afterwards. A boycott by the three main opposition parties means the election is most unlikely to return a full 500-member parliament, which is needed to elect a prime minister. That is plaguing markets and threatens to depress business investment and personal consumption already dented by rising interest rates and high energy prices, economists say.

The outlook is not clear at all, said economist Lim Su Sian of Bank of Tokyo-Mitsubishi (BTM) in Singapore, who cut her 2006 economic growth forecast for Thailand to 4.2% from 5% earlier this month and is considering another cut. I suspect that a lot of business decisions have been put on hold and obviously, if the April 2 poll does not end in a conclusive way which I dont think it will then postponement to business is likely to continue.

Reuters