How Thailand's political turmoil will weigh on its economy

Outlook isn't so bright.

According to DBS, there are plenty of downside risks to its 4Q GDP growth forecast of 1.7%. Data out from the domestic front have been poor. Even with some slight uptick seen in export growth, we are unlikely to see GDP growth rebound much in 4Q13.

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The prolonged political protests in Bangkok have been a drag on sentiment, both among businesses and consumers. Expect to see further moderation in both pri- vate consumption and investment growth in 4Q13. The outlook for 2014 is not brighter either, as long as we see no end in the current political deadlock.

Supposing the political crisis will be resolved soon enough, GDP growth may come in around 3.5% YoY for 2014. This is based on exports growth of 6% YoY, private consumption growth of about 3.8% YoY and investment growth of about 3% YoY.

All these are markedly lower than our initial projections for the year. The situation can get even worse. If there were no functioning government throughout the year, it may lead to GDP growth falling to 2.5% YoY in 2014. Note that we are also closely monitoring how capacity utilization trends going forward.

We see this as a key risk to manufacturing production in the near-term, even if the slightly better global growth picture would have provided some lift on the demand side.