Thailand‘s political crisis is battering the kingdom’s economy just as the global financial crisis begins to bite, analysts say, but a power vacuum at the top means nothing is being done to help.
Thailand is without a government after a court last week dissolved the ruling party, following a devastating eight-day blockade of Bangkok‘s airports by demonstrators trying to topple the administration.
The lack of leadership comes as the economy faces not only lagging demand for the tourism, commodities and manufactured exports which propel the Thai economy, but also reduced spending at home amid the political uncertainty.
“They really need to get an end to this political crisis and get a working government back in,” said Claire Innes, Asia-Pacific manager for global risk firm IHS Global Insight based in London.
“You need quite proactive policy-making — fiscal stimulus needs a legislative process, and with a government in disarray, strong decisive action is not going to happen.”
Thailand’s economy is already slowing. Thailand’s central bank has forecast growth for this year to be between 4.3 and five percent, having already cut its estimate from an earlier figure of 4.8-5.8 percent.
Innes said that it could slow further to 2.1 percent in 2009, starting in the fourth quarter of this year.
“We are expecting it to be weaker than even 2001 when the technology bubble burst and hit Asian economies quite hard,” she said, adding that poor growth was likely to continue through 2010.