Thai fin min cuts economic growth forecast

Yahoo! Singapore - Finance

Tuesday May 29, 2:51 PM

Thailand’s finance ministry on Tuesday slashed its economic growth
forecast for 2007, citing post-coup political uncertainty and
escalating violence in the country’s restive south.

The ministry revised down its gross domestic product (GDP) projection to 3.8-4.3 percent from 4.0-4.5 percent seen earlier.



he Bank of Thailand cut its annual growth forecast last month to
3.8-4.8 percent for 2007 from its previous estimate of 4.0-5.0 percent.

Growth of just 3.8 percent would mark the lowest rate since 2001, when GDP expanded 2.2 percent.

“Consumption and investment have been weak, partly because of
political uncertainty and (high0oil prices,” Pannee Sathavarodom, head
of the finance ministry’s fiscal policy office, told reporters.

“The political factor is certainly slowing consumption,” she said,
adding that an insurgency in the Muslim-majority south was also
pressuring the economy.

More than 2,200 people have been killed in a separatist insurgency
in the south since January 2004 despite peace-building moves by the
army-backed government, which came to power after a coup in September
last year.

With Thais feeling gloomy over the outlook of post-coup Thailand, consumer confidence is stuck at a five-year low.

The ministry’s downgrade came a day before a landmark court decision
over whether to dissolve Thailand’s two largest political parties.

On Wednesday, the Constitutional Tribunal decides whether Thai Rak
Thai, the party formed by ousted premier Thaksin Shinawatra, and the
Democrat Party are guilty of a slew of charges of electoral fraud
related to annulled elections in April last year.

The tribunal has the power to dissolve the parties and ban their
executives from politics for five years. Analysts say dissolving the
two main parties could plunge the country into even more disarray.



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