As political confrontation heated up yesterday, the stock market tumbled and the country's leading think-tank was forced to trim prospects for economic growth.
The Stock Exchange of Thailand (SET) Index plunged 2.7 per cent, dampened by a brawl between the People's Alliance for Democracy (PAD) and supporters of the government's proposed constitutional amendments, in line with a sharp fall on Wall Street and regional stock exchanges.
The stock market fall was also aggravated by a report that the Energy Ministry had asked oil companies to cut the ex-factory price of diesel by up to Bt1 a litre. The money gained from the oil companies will be used to alleviate the burden of high prices on consumers.
The SET Index took a nosedive at yesterday's opening bell and headed further south to the day's trough of 851.65 points, or a 2.7-per-cent slump, before retreating slightly to close the day at 856.8, a 2.15-per-cent drop.
Although Thailand's economy grew at a high pace of 6 per cent in the first quarter, the National Economic and Social Development Board (NESDB) yesterday kept its forecast for the full year's economic growth unchanged at 4.5-5.5 per cent amid grave concern over a sharp fall in consumer and business confidence.
NESDB secretary-general Ampon Kittiampon said if confidence remained intact, the economy could grow 5-5.5 per cent - or even 6 per cent.
He expressed concern that the current situation would bring a repeat of conditions in 2006, when political turmoil tremendously dampened business and consumer confidence and dragged growth down.
"We just decided last Saturday to hold the economic-growth projection, even though there is an 80-per-cent probability the economy will grow at a higher rate than 5 per cent," he said. "Confidence is the risk factor that cannot be calculated in the equation."
Asian stock markets fell across the board yesterday, in a range of 0.31-3 per cent.
"The local political factor is the main factor driving the Thai stock market," said Asia Plus Securities senior vice president Therdsak Thaveeteeratham.
"By chance, stock markets abroad also slumped. Foreign investors in the past were net buyers of Thai shares, but the political situation has prompted them to lock in profits."
The PAD yesterday notified its intention to launch impeachment proceedings against sponsors of the parliamentary motion on the proposed charter rewrite.
"The PAD is ready to begin the signature campaign to solicit the endorsement of 20,000 voters to remove the House Speaker, MPs and senators who co-signed the motion to amend the charter," said PAD leader Somsak Kosaisuk.
In a plea to the public, Bank of Thailand Deputy Governor Atchana Waiquamdee said Thais should not allow political factors to worsen the economy after it had been hurt for two years. The economy currently needs domestic demand to maintain economic growth momentum while exports are at risk, she said.