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Instant View: Thai fourth-quarter GDP growth slowed to 0.6 pct q/q, as expected

BANGKOK (Reuters) - Thailand's economy grew 0.6 percent in the last three months of 2013 from the previous quarter and by the same percentage from a year earlier as exports were weak and a political crisis hurt tourism and domestic demand.

The state planning agency that compiles the data revised down its forecasts for both exports and GDP growth this year, and also said inflation may be lower than it earlier anticipated.

Monday's numbers could add to the case for the Bank of Thailand's Monetary Policy Committee to cut the policy rate when it meets on March 12. At its last meeting, the committee voted 4-3 to keep the rate at 2.25 percent.

A Reuters poll of economists had forecast quarter-on-quarter expansion of 0.6 percent in October-December, and on-year growth of 0.4 percent.

COMMENTARY:

Gundy Cahyadi, economist, DBS Bank, Singapore:

"Confidence is low and private sector demand in the domestic economy remains weak given the political deadlock. There are downside risks to growth momentum this year, despite the fact that Thailand should benefit from the slightly stronger pick-up in global growth. We would continue to monitor capacity utilization for signs on how strong of a recovery we should expect this year. At this juncture, our forecast remains for GDP growth at 3.5 percent year-on-year in 2014.

"There is likely to be pressure on the Bank of Thailand to trim its interest rates further. With the crippling of fiscal policy, the tendency is for pressure on the central bank to deliver more. But we think that monetary policy is already accommodative at this juncture. The central bank remains concerned about household debt for the longer-term. And it is right to be concerned about this.

"At some point, the public and markets will understand that the current downturn in the economy is due to the political situation. There is probably little that an interest rate cut can do to push for a rebound in this kind of environment."

Barnabas Gan, economist, OCBC, Singapore:

"For this year, we believe that the growth could still be lackluster, at 2.8 percent. We believe that current crisis is less of an economic one, more so as a political one, so if there is a cut in interest rates, we believe that it may be irrelevant given the current state of things. We called for no change in the policy rate at the last meeting and we are continuing to call for no change for the upcoming one.

"We are looking at the political problem to end hopefully, by the third quarter of this year. So driver of growth will be on two fronts. Firstly, government expenditure. This should kick in after government has been established and secondly, the favorable global environment."

LINKS: For details, see NESDB website: http://www.nesdb.go.th

MARKET REACTION:

The baht was further strengthened to 32.30 to the dollar from 32.37 after the GDP numbers came out. Thai shares <.SETI> were up 0.65 percent at 0305 GMT.

(Reporting by Bangkok bureau and Karen Lema in Manila; Editing by Richard Borsuk)

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