Thailand: Another coup challenges the country's economic resilience

6/6/2014 - Report
ic_blogtagThailandInvestmentMonetary PolicyPoliticsSupply Chain
Thailand's economy is facing a triple threat: political instability, deterioration in financing conditions and a slowdown in domestic demand. Tapering by the US FED and political turmoil accelerated short-term capital outflows while long-term capital flows remained resilient. As a result, sectors led by domestic demand and domestic financing will be the most affected: construction, retail and, to a lesser extent, textiles. Other key sectors, such as IT and automotive manufacturing, should however benefit from the external demand momentum and funding from external sources. Our baseline �crisis resolution' scenario (70% of likelihood) supports a recovery in H2 (GDP expected at +1.5% only in 2014) led by rising external demand. Should the situation escalate (scenario 2, 30% of likelihood), GDP could contract by -2% and supply chains at risk include automotive and IT ones with spillovers in China, Japan and the US.

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Thailand: Another coup challenges the country's economic resilience - Report