BANGKOK: Thailand's economy is still stuck in first gear nearly six months after the army overthrew the government to end months of turmoil, with demand at home and abroad stubbornly weak and big government projects unlikely to bear fruit until next year.
A spate of poor economic data, including the government's economic downgrade on Thursday, is an uncomfortable reminder to the junta at a time when expectations are running high. When it seized power in May, the army said it needed to restore order, kick-start growth and "return happiness to the Thai people".
A week after the coup, economists had rushed to raise their estimates with hopes high that army rulers would turn the economy around. But the positive sentiment is fading as economic indicators have mostly disappointed and consumer confidence last month slipped for the first time since the coup.
While trade figures surprised by rebounding in September in a rare bit of good news, the details were not so encouraging.
Some economists have cut their growth estimates again for 2014, while businesses as well as the military government agree that improvements won't be evident till next year.
On Thursday, the Ministry of Finance again cut its economic growth forecast to 1.4 percent from 2 percent made in July - the weakest growth since 2011, when devastating flooding slashed economic growth to just 0.1 percent.
It also lowered its growth forecast for next year to 4.1 percent from 5.0 percent.
The ministry, the central bank and economists have steadily trimmed their estimates for the year. Only a year ago, the ministry estimated GDP growth of 5.1 percent.
The central bank's latest 2014 GDP growth forecast is 1.5 percent, while private economists have a wide range of estimates - Kasikorn Research Center and DBS Bank predict 1.6 percent, HSBC projects 1 percent and OCBC Bank sees 0.0-0.5 percent.
PUMP-PRIMING FOR GROWTH
Although the economy avoided a technical recession in April-June, it still shrank 0.1 percent in the first half. The finance ministry predicted on Thursday that annual growth would be 2.9 percent in the second half.
Pimonwan Mahujchariyawong, economist with Kasikorn Research, expects annual GDP growth of 2 percent in July-September and more than 1 percent on the quarter, helped by public spending.
Exports and imports in September grew unexpectedly, but economists said that was not enough for the economy to turn the corner. Exports, equal to more than 60 percent of GDP, have long been tepid due to weak global demand and low commodity prices.
Gundy Cahyadi, economist with DBS Bank in Singapore, said: "It remains to be seen if the strong import demand in September proves to be the start of a new trend."
Friday's data is expected to show that factory output in September fell for the 18th straight month and the central bank's index for private consumption and investment slipped again. Auto sales are still tumbling and consumers are so indebted, spending is not expected to get much of a lift.
The government is giving some help to farmers, but nothing like what previous governments did, so rural consumption will stay weak. While Thailand is seen as one of the main beneficiaries of lower oil prices, being a net oil importer, the fall in commodity prices will hurt rural incomes.
The final three months of the year are usually the best for businesses in Thailand, but not this year.
Thai mobile operator Total Access Communication recently cut its 2014 revenue forecast, saying consumer spending is unlikely to drive revenue significantly..
Households are also feeling the pinch. Karnrawee Pila, who sells vegetables, said: "I'm hoping things will get better. The economy is not good and people are spending less."
Benjamin Shatil, economist at JP Morgan in Singapore, said "the hope remains that fiscal stimulus currently in the works will be sufficient to jump start the economy into next year."
The junta is stepping up delayed infrastructure projects, although the benefits are not expected until 2015 or later.
This month, the government announced economic measures worth 364 billion baht ($11.2 billion), focusing on creating jobs and income and helping farmers.
Finance Minister Sommai Phasee has said the junta might introduce more measures to prop up the economy next year.
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