Thailand teeters toward recession

BANGKOK (AFP): Thailand could slide into technical recession if second-quarter growth results due next month fall into negative territory, dashing hopes for a recovery from the 1997 financial crisis, analysts say. Over the three months to March, Thailand’s gross domestic product (GDP) shrank by 0.2 percent when compared to the previous quarter, although on a year-on-year basis it recorded a modest 1.8 percent expansion. A second successive quarter of negative growth would trigger a technical recession, leading Thailand down the same path as Singapore whose export-dependent economy is also suffering a slowdown. A spokeswoman for Thailand’s official record keeper, the National Economic and Social Development Board (NESDB), said the results due out on September 17 were likely to be disappointing. “Growth may not be as high as in the first quarter,” she said. “The best thing would be to hope for flat results.” The NESDB had forecast the Thai economy to grow by 2.5 percent over 2001, but the International Monetary Fund (IMF) and many independent analysts believe the result will be closer to 2.0 percent. The IMF said in a report last week that Thailand’s economic recovery had been hampered by uncertainty over the new government’s economic policies. “The difficult external environment, the need for further structural reforms and uncertainties about the future orientation of economic policies have dampened the recovery,” it said. The IMF has stated repeatedly that it would like to see accelerated restructuring of bank and corporate balance sheets and more consistent formulation of economic policy, to avoid a new slump.