Central bank decreases economic growth projection

BANGKOK, July 25 (TNA) – The Bank of Thailand (BoT) has revised its economic growth estimate for this year downward to 3-4.5 per cent from the 1.5-3 per cent forecast earlier, citing the presence of many critical risk factors which the economy now faces.

BoT Deputy Governor Atchana Waiquamdee said the factors include the slower-than-expected global economic growth, possible failure by the government to disburse its budget to stimulate the economy, political uncertainties, the ongoing A(H1N1) influenza pandemic that affects tourism and private-sector consumption, and rising oil prices.

These factors could undermine both corporate earnings and the purchasing power of consumers.

“The economy looked more stable in the first two months of the second quarter and we believed it had already bottomed out. Still, the negative growth of the gross domestic product at 7.1 per cent in the first quarter is worse than expected,” Atchana said.

However, she revealed that the central bank had increased the GDP projection for next year to 3-5 per cent from 1.5-3 per cent expected earlier since it is projected the global economy will recover and grow 3.4 per cent next year.

Atchana said the Thai economy is likely to enjoy positive growth in the fourth quarter this year because exports will tend to decline at a slower pace, the second phase economic stimulus scheme will benefit the economy and the government speeds up its budget disbursements.

Private-sector consumption is expected to drop further by 1-3 per cent and private investment to shrink by 17-19 per cent.

Exports are forecast to contract 19.5-22.5 per cent and imports to shrink 29-32 per cent, resulting in a trade surplus of US$15-18 billion and a current balance surplus of the same amount.

She affirmed the central bank had closely monitored the baht movement all along.

Atchana shrugged off criticism that exports had dropped sharply because of the stronger baht, saying the plunge was not mainly due to the baht’s rise.

Whether exports would grow favourably depends on the global economic situation and the economic expansion of Thailand’s trade partners. (TNA)