Anti-government protests, coupled with lessening demand for exports and an expected ‘tapering’ of the US Federal Reserve’s $85bn-a-month bond-buying programme, has led Thailand’s GDP to slow to 3.8% according to the Asian Development Bank (ADB). While renewed foreign investor activity in the country at the start of 2013 led the ADB to predict a growth of 4.9% by the year’s end, lower-than-expected domestic and export demand, and an uncertain investor outlook caused by the Federal Reserve’s indication that the US may be on a stronger path to recovery, led to markedly slower growth in the final quarter of 2013.

In addition, anti-government protests at the start of November, fuelled by the government’s decision to grant former prime minister Thaksin Shinawatra political amnesty, could further dent the country’s tourism revenues, and BNP Paribas reported that widespread demonstrations would shave 0.5% points from Thailand’s GDP.

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A series of foreign investments at the start of 2013 prompted the ADB’s optimistic prediction for Thailand. These included Japan-based carmaker Mazda’s commitment of $284m in January to build a transmission manufacturing facility in Thailand, and Suzuki Motors’ move in March to invest $44m into increasing its capacity at a manufacturing complex. But according to greenfield investment monitor fDi Markets, market demand failed to meet investors’ expectations. And while the Thai government’s tax incentive scheme for first-time car-buyers was significant in boosting domestic demand in the first half of 2013, the withdrawal of the scheme in the second half of the year precipitated a sharp decline.

According to Barclays, domestic demand for cars dropped by 1.2% in the second half of 2013, further depressing the growth of the automotives sector which is Thailand’s third largest industry. The country’s lacklustre export performance, which the World Bank estimates increased by just 0.2% year-on-year in the first three quarters of 2013, down to a decline in Thailand’s strategic industries including electronics, rice and shrimp exports. Although Thailand’s exports are expected to recover next year by 5% according to the World Bank, this recovery will depend on stronger global growth.