According to a report from the Wall Street Journal,on Wednesday, antigovernment protesters continued to demonstrate at the Government House, Ms. Yingluck's main offices, demanding that she and her interim government step aside and be replaced by an appointed assembly.
Appropriations for billions of dollars of projects—such as a high-speed rail line—have been slowed amid political upheaval that has included sit-ins at government buildings and massive traffic tie-ups. Meanwhile, instability creates risk, which investors dislike and which could damp growth until at least the second quarter of next year, analysts said.
"A lot of [economic recovery] hinges on whether we will have the elections and who will win," said Thanit Sorat, deputy chairman of the Federation of Thai Industries, a private group promoting Thai industries. "But a bigger question is then, 'Will there be peace?' Protesters who disapprove of the vote outcome may come out on the streets again in no time."
The Thai economy has been weak, with the Bank of Thailand's latest forecast predicting it will have grown 3% overall in 2013. Sluggish private consumption and investment have made government spending even more important to invigorating the economy, analysts said.
Government spending has slowed since October, when Ms. Yingluck's political problems escalated following a proposed amnesty bill. In October and November, government budget disbursements were below targeted goals, and 15.2% lower than the same period last year, according to FTI.
High-profile infrastructure investment projects—touted as the turbo driver of the economy—will be put on the back burner, said Benjamin Shatil, regional Asia economist at J.P. Morgan. These include the government's plan to borrow as much as 2.2 trillion baht ($68.75 billion) off budget to spend over the next seven years to improve the country's aging rail system, highways and ports.
The borrowing bill for these projects passed the lower house and the Senate last month, but hit a snag when the government's opposition asked the Constitutional Court to review its legality. If the bill survives the court's scrutiny, it still will have to be proposed for the king's approval by the new government, which wouldn't likely be fully functional earlier than the second quarter of next year—assuming elections take place as scheduled.
On Wednesday, antigovernment protesters continued to demonstrate at the Government House, Ms. Yingluck's main offices, demanding that she and her interim government step aside and be replaced by an appointed assembly.
