Thai junta's 2015 growth forecast to prove optimistic

Subject

2015 economic outlook.

Significance

According to the Ministry of Finance's Fiscal Policy Office, GDP growth slowed to between 1.2% and 1.7% in 2014 from 2.9% in 2013. Data released by the Bank of Thailand on December 30 suggest that the final figure is likely to be at the lower end of the range. Recovery in the fourth quarter was modest (at an estimated 1.0%) against 0.6% in the third. The military-backed government forecasts 4.1% GDP growth this year, assuming more tourists, higher domestic demand, export growth and rapid implementation of infrastructure plans.

Impacts

• Sluggish growth will intensify calls for elections, but the junta will not relent, especially until the royal transition has been secured.
• The 2014 coup may not be the last; this will maintain the long-term contractual risks for investors.
• Political instability could return by end-2015, dampening household consumption.