Thai political woes may mean recession-govt adviser

BANGKOK, Oct 15 - Thailand risks sinking into recession in the first half of 2009 if its protracted political crisis does not end soon, a top adviser to Finance Minister Suchart Thada-Thamrongvech said on Wednesday.

Anusorn Tamajai, a U.S.-educated economics professor, said the political stalemate was hurting consumer confidence and consumption.

"There is a high possibility Thailand will see a recession in the first half of 2009 if we can't end this political conflict," he told Reuters in an interview.

"It is slowing down consumption, which then will severely hit investment, while revenues from exports to major markets and tourism will come down due to a global economic slowdown."

A recession is usually defined as two consecutive quarters of economic contraction.

Two people died and nearly 500 were injured in Bangkok last week in clashes between police and protesters intent on overthrowing the government. The protesters have occupied the prime minister's official compound since August.

"Our economic fundamentals remain strong and our banks have little exposure to bad loans in the United States and Europe," Anusorn, a former Thailand economist for Citibank, said.

"But our political division is the biggest political risk. Nobody has a solution for it and it is hurting the economy."

He was speaking before fighting broke out between Thai and Cambodian troops on their disputed border, adding to the government's problems. News of the clash sent shares lower <.SETI>. [ID:nSP366588]

Thai consumer confidence hit a 10-month low in September, eroded by the political turmoil, the global financial crisis and slowing export growth, a survey by the University of the Thai Chamber of Commerce said last week.

Suchart said last week he expected the economy to grow 5 percent this year, which would be up from 4.8 percent in 2007, when activity was depressed by a military coup in late 2006.

The economy grew 5.7 percent in the first half from a year earlier, but Suchart has said third-quarter growth would be only around 4 percent.

Economists polled by Reuters in late September forecast 4.9 percent growth in 2009.