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Economy

Thailand dodges recession with Q2 growth

Thailand has escaped recession, but questions remain about future growth prospects for Southeast Asia’s second-largest economy. The latest quarterly figures came just three months after a military coup.

Thailand's economy grew 0.9 percent in the second quarter compared to three months prior, statistical data showed Monday.

But despite avoiding a recession, market analysts believe that Southeast Asia's second-largest economy is still looking at a disappointing year.

The National Economic and Social Development Board, which logged the growth data, cut its outlook for the year to 1.5-2.0 percent expansion, down from a previous estimate of 1.5-2.5 percent.

Political turmoil in the first five months of the year likely weighed on the economy, the board said, causing it to "perform below its potential" in 2014, particularly in key sectors like auto and tourism.

Thai army tightens grip on power

Since Army Chief Prayuth Chan-ocha seized power last May, he has tried to assuage investors' fears that the coup could stall Thailand's economy.

"I hope that in 2015 the country will come into its own," Prayuth said. "We seized power in order to improve confidence in the country."

To do so, the military junta has paid back outstanding arrears to rice farmers, capped fuel prices and reassured foreign investors that Thailand will return to democracy within a year.

Prayuth has also pledged to energize stalled infrastructure projects, for example by developing major train and road links.

His efforts appear to have boosted consumer confidence, which rose in July to its highest level in 11 months. They followed months of political protests that froze government expenditures, hurt consumer spending and discouraged tourists from visiting the country.

The number of foreigners traveling to Thailand has sunk 12 percent in the last year, despite government assurances that the country is safe.

el/cjc (AFP, Reuters)

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