Martial law sparks big drop in growth projections for Thailand

BANGKOK – In a response to the imposition of martial law in Thailand, ANZ Bank has downgraded its GDP growth projections for the country for 2014 from 2.2% to just 1.3%. While martial law might be the necessary and sufficient step towards ending months of protracted political uncertainty, it is unlikely to arrest a still-deteriorating economic outlook, ANZ says.

“The ceaseless downgrades to Thailand’s growth prospects in recent months have merely been a function of a lacking functional government and constrained and ineffective fiscal policy,” ANZ says. “Though the move by the Thai army is their most activist politically since the coup of 2006 that removed then-PM Thaksin, martial law and pro-active fiscal policy have typically not wed well. Hence these developments do not alter a very weak economic outlook borne of political and fiscal ineffectiveness.”
The bank adds, however, that martial law may be the first step to restore political normalisation for Thailand. www.live.anz.com (ATI).