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Thailand points to regional recession
The Australian - February 25, 2009
Bangkok – A contraction in Thailand's quarterly economic growth confirmed fears that much of Southeast Asia – until recently a relative bright spot in the world economy – is sinking into a potentially deep recession.
Growth was already nosediving in Singapore, the region's financial capital, and Malaysia is expected to see deceleration in economic activity when it reports its most recent quarterly data this week. Layoffs are thinning operations at textile factories and semi-conductor plants, and economists warn the region's planned stimulus packages won't be enough to offset declines in exports to the US and elsewhere.
Thailand's report underscored the fears. The country's economy – Southeast Asia's second largest behind Indonesia – contracted 4.3 per cent in the fourth quarter compared with the year-earlier period, considerably worse than analysts expected. The Government slashed its 2009 forecast to between 0 per cent and a negative 1 per cent contraction, from earlier projections of 3 per cent to 4 per cent growth, meaning Thailand will almost certainly enter a recession this year.
The report came as several thousand protesters allied with exiled former prime minister Thaksin Shinawatra marched toward the Prime Minister's office in Bangkok yesterday, demanding a dissolution of parliament and the holding of snap elections.
The protests reignited the kingdom's political turmoil ahead of the 10-member Association of Southeast Asian Nations summit in Bangkok tomorrow.
Members of United Front for Democracy against Dictatorship have campaigned against the Government since a court dissolved the pro-Thaksin former ruling party in December, paving the way for Prime Minister Abhisit Vejjajiva to take power.
The Thai economy "will be likely to get worse" before it gets better as exports stay weak, said Sriyan Pietersz, an analyst at JPMorgan in Bangkok.
Southeast Asia had looked somewhat stronger than the rest of Asia and many other emerging markets, thanks in part to the reserves its governments built up after the 1997-98 Asian financial crisis. Many local companies and consumers, burned by currency devaluations in the late 1990s, avoided the excessive foreign borrowing and other risks now weighing on eastern Europe and elsewhere.
Within the region, Indonesia and The Philippines are still performing better than most emerging nations, mostly because their large consumer markets are offsetting declines in export revenue. Both countries posted growth of more than 4 per cent in the fourth quarter. (The Wall Street Journal, AP)
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