The World Bank has cut Thailand’s GDP growth forecast this year from 4.5 percent to 3 percent.
The World Bank’s new economic outlook report slashed its GDP growth forecast for the East Asian and Pacific regions to 7.1 percent, including a sharp downgrade for the Thai economy following months of political turmoil.
Nonetheless, Thailand is projected to grow 3 percent this year compared with 2.9 percent in 2013. However, it will face slowing domestic demand due to a protracted political crisis.
The World Bank said the most immediate risks to Thailand’s future growth are the pace of recovery of the global economy and the current political situation. A slower-than-expected recovery in the global economy and a faster slowdown in the Chinese economy will have a negative impact on Thai exports.
The political gridlock has already led to deteriorating confidence. Delays in the long-awaited large public infrastructure projects will affect growth not only this year but also in the long run, since better water management and logistics improvements are crucial for the country’s future growth. Moreover, continued political instability has been distracting governments from focusing on long-term development issues such as improving skills and competitiveness.
The bank also added in its statement that if the political unrest is concluded in the near future, economic expansion could be back on track this year.