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Thailand stuck in economic malaise
Publication Date : 26-04-2014
The half-empty foodcourt on the fifth floor of the popular MBK mall in Bangkok tells the story of Thailand's slow sink into the doldrums.
Ornuma Boonmali and her three co-workers at the stall selling Mexican food have very little to do these days. Likewise, Dal Shahani at the Indian food stall across the aisle. Business is down 50 per cent, both of them say.
An enervating mix of lame- duck government with no sitting parliament, more than five months of street protests, and increasing violence and killings has sapped consumer confidence in this city.
But the street protests, which saw thousands occupying strategic intersections in downtown Bangkok, including the one right in front of the MBK mall, have hit tourism and the related retail and food service industries hard.
The number of Chinese, Japanese and Middle Eastern tourists plunged during the peak January-February period, retailers told The Straits Times.
MBK managing director Sakchai Kengkijkosol told The Straits Times that in normal times, the mall saw about 85,000 visitors a day, nearly half of them tourists. But he says business began slowing last October, when the street protests first began.
MBK cut rental rates by 20 per cent in the January-March period to help tenants on the verge of closing down.
Business has been picking up, but very slowly, since the protesters left the intersections last month, he added.
MBK Group owns golf courses, malls, the Pathumwan Princess hotel in downtown Bangkok, and a financial services company, among other things. But the economic malaise is felt not only in tourism-related sectors.
Earlier this month, MBK Group suspended a planned expansion into the hospital sector. And while group sales rose 11 per cent last year, this year's sales are expected to be flat.
Earlier this month, the World Bank cut its growth forecast for Thailand this year from 4.5 to 3 per cent. The government's National Economic and Social Development Board predicted that the economy would shrink in the first half of this year, bringing Thailand close to a recession.
Yesterday, The Nation newspaper quoted an unnamed finance ministry source as saying the government was facing a significant revenue shortfall this year.
"It would not be surprising," said Dr Luxmon Attapich, senior country economist at the Asian Development Bank. "First-quarter growth figures are not out yet, but it is quite possible we will see no growth.
"Business and consumer confidence is not good. Consumption will not expand this year. Investors are tentative, and government disbursement is an issue. All these engines are not functioning well."
But Thailand's fundamentals are still strong, Dr Luxmon noted, with inflation under control and enough international reserves to cover eight months of imports.
The economy could bounce back, she said, but only if the political situation is resolved by the third quarter of the year and there is a fully functioning government in place by the end of the year.
However, the political situation is anything but certain. Deputy Prime Minister Surapong Tovichakchaikul yesterday warned that clashes could erupt between pro- and anti-government groups if the Constitutional Court were to disqualify Prime Minister Yingluck Shinawatra from office. A ruling is expected in the next two weeks.