HONG KONG – The World Bank slashed its economic growth forecast for Thailand on Monday because of ongoing political strife that is crimping domestic demand.
The Washington-based organization forecast that Thailand’s economy would expand 3 per cent this year, down from 4.5 per cent growth it had forecast at the end of last year.
The bank also cut trimmed its 2015 growth forecast for the country to 4.5 per cent from 5 per cent. In its twice yearly report on developing East Asia and the Pacific, the bank also predicted regional growth would ease a smidgen but will continue to be stable, bolstered by the recovery in developed nations.
Thailand has been gripped by more than five months of anti-government protests that have affected “tourism receipts, public investment, and investor confidence,” the bank said.
“Households are likely to be more cautious in their spending this year due to several uncertainties around the impact of the political turmoil,” the report added.
The protesters have been temporarily blockading and occupying government offices in Bangkok. They also interfered with registration and voting in a general election in February and have clashed with police on several occasions.
The violence has killed 24 people and injured hundreds since November. It is the latest phase of a cycle of instability in Thailand since Thaksin Shinawatra was ousted in a 2006 military coup. The current government is led by Thaksin’s younger sister Yingluck Shinawatra.
The World Bank forecasts developing East Asia to expand 7.1 per cent in 2014 after growing 7.2 per cent in 2013.
China, which is Asia’s biggest economy and undergoing an extended slowdown, is forecast to grow 7.6 per cent, down from 7.7 per cent last year and close to the official growth target set by Beijing.