Bangkok: Thailand’s economic growth slowed in the three months to June, new figures released Monday showed, days after a string of bomb and arson attacks struck the country’s crucial tourism sector.
High household debt, weakening exports, slumping foreign investment and low consumer confidence have cramped growth in what for years was Southeast Asia’s flagship economy.
A military junta seized power in 2014 vowing to end years of political instability and kick-start the lacklustre economy.
Thailand’s growth has since picked up slightly, mainly off the back of ramped-up government spending and continued tourist arrivals. But it remains comparatively low compared to its neighbours.
Figures released by the National Economic and Social Development Board showed second quarter GDP growth was up slightly at 3.5 per cent year on year.
But the seasonally adjusted quarter-on-quarter growth was 0.8 per cent, a slight dip from one per cent in the first quarter.
In a briefing note, Captial Economics said Thailand already faces strong headwinds from global growth concerns and the country’s waning export competitiveness, adding that trend will be compounded if political instability continues.
Significant risk
Last week nearly a dozen bombs exploded in popular tourist resorts in the country’s south, killing four and wounding scores more, including European tourists.
No one has claimed responsibility for the bombing spree which hit a sector that makes up around 10 per cent of the economy.
“There is a significant risk that the bombings prove to be the start of a new violent phase of Thailand’s long-running political conflict,” Krystal Tan, an economist at Capital Economics said.
“The big picture is that concerns about political stability will persist until Thailand is able to find a lasting solution to the deep political divide between the urban elite and the poorer rural population,” she added.
The kingdom has been beset by a decade of political turmoil which began when the military toppled prime minister Thaksin Shinawatra in 2006.
Years of competing streets protests, short-lived governments and outbreaks of violence have followed, culminating in another coup in 2014 that toppled the administration of Thaksin’s sister Yingluck.
