Country Report Thailand February 2009

Summary

The political scene will remain unstable. Given the serious political and economic challenges facing Thailand, the prime minister, Abhisit Vejjajiva, will have done well if his government is still in office in a year's time.
As the economy enters recession, opposition protestors, led by the United Front for Democracy Against Dictatorship, will exploit increased economic hardship in an attempt to discredit the government and its policies.
The government’s fiscal policy will remain expansionary, while the Bank of Thailand (BOT, the central bank) will loosen monetary policy further in response to decelerating inflation and sluggish domestic economic activity.
Owing to the dismal outlook for the world economy, the Economist Intelligence Unit forecasts that Thailand's economy will contract by 1.8% in 2009. A modest pick-up in will occur in 2010, with GDP growth reaching 2.2%.
Based on the assumption that the economy will contract and that global prices for crude oil and non-oil commodities will fall sharply, we forecast that Thailand will experience mild deflation in 2009.
The current account will remain in negative territory in 2009-10 as merchandise trade surpluses are offset by deficits on the services and income accounts.

The ruling coalition secured a vitally important victory in a round of by-elections in January, bolstering its majority in parliament and thus giving it greater protection against challenges by the opposition.
In recent weeks foreign media organisations have been publishing accounts of serious human rights abuses perpetrated by the Thai military. The armed forces have denied any wrongdoing, a position that Abhisit has supported.
The administration has quickly set about drafting a range of policies aimed at stimulating economic activity and preventing the economy from entering recession.
The BOT has continued to ease monetary policy, cutting its policy interest rate, the one-day repurchase (repo) rate, by 75 basis points in mid-January.
Although official data for real GDP have yet to be published for the fourth quarter of 2008, the Fiscal Policy Office has revealed that it estimates that real GDP contracted by 3.7% year on year in the quarter.
The latest data for manufacturing output reveal that Thailand is by no means immune to the harmful fallout from the economic slowdown in the developed world. In December manufacturing output and exports plunged.

Source: Country Report

This report covers the following industry codes:
SIC Code: 82;47;49;1;10;15;60;39;70
NAICS Code: 61;48;22;11;212;23;52;31;72