Economy could contract if new govt is delayed

The chamber has cut its economic growth forecast for next year from 2-3 per cent to 0-2 per cent due to the worsening situation, particularly on the political front. If the economy grows by 0-2 per cent, the number of unemployed will be about 900,000, but if the economy has negative growth next year, the number of people unemployed will rise to more than 1.3 million.

"Thailand must have a new government as soon as possible in order to boost both Thai and foreign investor confidence," vice chairman of the chamber, Dusit Nontanakorn, said.

An economic contraction would make it the worst performance since the 1997 crisis.

Among the tasks the private sector wants the new government to deal with urgently are: boosting investor confidence; bringing back tourists; boosting export growth; and stimulating the domestic economy and internal spending.

Dusit said the absence of a government has hurt economic activities. The country needs a democratically elected government to implement policies and drive economic growth.

Thanavath Phonvichai, director at the University of Thai Chamber of Commerce's Economic and Business Forecasting Centre, said if Parliament was dissolved, it would create huge losses for the country.

"The best solution is to set up a new government as soon as possible to increase confidence in the country. If Thailand did not get a new government before the year-end, the economy could shrink and hit all sectors and many businesses may close down next year," Thanavath warned.

TCC vice chairman Phongsak Assakul said exports would not expand next year due to the economic slowdown in target markets as well as cash-flow problems confronting businesses.

"Exports will be unable to grow next year as Thailand faces double trouble - domestic and overseas problems," he said.

In the worst-case scenario, exports may drop next year if the government is not formed within this year to help drive export growth and support exporters who are facing liquidity problems.

Recently, the World Bank forecast that Thailand's economy would grow by 2 per cent next year, while exports would grow by 8 per cent. It is expected that Thailand's economy will expand only 3.9 per cent this year, from a previous 5-per-cent growth estimate. Exports will grow by 19.5 per cent to US$181 billion (Bt6.4 trillion) this year.

In addition, due to the political turmoil, which led to two airports being closed this year, tourism is expect to face flat growth this year and next year.

Apichart Sankary, president of Thai Travel Agents Association, said the number of tourists this year would be 15.4 million, lower than the previous estimate of 16 million. The actual income generated is estimated at Bt600 billion, lower than the projected Bt630 billion.

"The tourism sector will face a dramatic drop next year to only 14 million travellers, generating incomes of Bt500 billion," he said.

To urgently revive tourists' confidence, the association urged the government to reduce travelling tariff and cut landing fees at airports.