Thailand’s economic growth slowed sharply in 2014 to its weakest pace in three years, as political turmoil engulfing the kingdom compounded a fall in agricultural prices and waning exports.
Gross domestic product (GDP) expanded 0.7 per cent last year, well down from the 2.9 per cent recorded in 2013, the the National Economic and Social Development Board (NESDB) said in a statement today.
The figure is the weakest since 0.1 per cent in 2011, when the country was battered by devastating floods.
Growth was widely expected to be dragged by months of political unrest that damaged tourist arrivals, slowed foreign investment and paralysed government spending before the army seized power in May vowing to restore peace and put zip back in the economy.
However, there were some good signs as fourth-quarter growth came in at 2.3 per cent on a year-on-year basis, and 0.6 percent on the previous quarter, according to the board.
“The expansion of GDP in this quarter was due to an upturn in the non-agricultural sector,” a rise in domestic and external demand and greater investment, the board added.
Over the year, Thailand’s key agricultural sectors— including rice and rubber—struggled with falling global prices, curbing the amount of crops produced and taking money out of Thais’ pockets.
The ruling junta has vowed to pump billions of dollars into the economy, mainly through long-planned infrastructure schemes.
But the latest figures will heap pressure on the leaders, who have vowed to curb subsidies to agriculture and called on Thais to wean themselves of credit. Thailand is one of Southeast Asia’s most indebted kingdoms.
Prime Minister Prayut Chan-O-Cha, who also heads the junta, said full-year GDP matched expectations.
“I’m not worried. The figure will be better this year, it should be between three and four percent,” he said, adding tourism had already rebounded despite ongoing martial law.
Analysts have urged the junta to swiftly embark on the promised spending to galvanise the economy in 2015.
“The government should quickly press ahead with the investment budget in order to boost the economy,” Thanavath Phonvichai at the University of the Thai Chamber of Commerce told AFP.
He also said the government would be wise to ensure Thais are given cheap loans to meet their payments while prices for commodities such as rubber and rice tumble.
The troubles for the once buoyant economy comes as regional rivals Indonesia and the Philippines pull ahead.
“The Thai economy should gain a firmer footing in the coming quarters, but growth is still likely to disappoint by past standards,” Capital Economics said in a briefing note.