The Bank of Thailand (BOT) has downgraded growth projections for the Thai economy in 2015 to 3% from an earlier forecast of 3.8%, as the export sector continues to perform below expectations.
In an official statement, BOT Assistant Governor Mathee Supapongse, also the Secretary of the Monetary Policy Committee (MPC), said the nation is projected to “recover more slowly than the previous projection mainly as a result of weaker-than-expected export growth.”
The bank revised its export forecast to a contraction of 0.5%, down from a March 0.8% growth projection.
Mathee said contributing to the MPC’s forecast revision include the slower-than-expected global economic recovery due to a slowdown in China and other Asian economies, and a shift in global trade structure that tempers international trade growth.
He also cited higher public spending than previous assessment, especially public investment, and increased global oil prices in the second quarter of 2015.
“The slow global economic recovery, the shift in global trade structure, structural problems in Thai merchandise exports, and the appreciation of nominal effective exchange rate together contributed to the decline in Thailand’s exports of goods. This further deteriorated income outlook and private-sector confidence,” he said.
Together with cautiousness of financial institutions in loan extension, private spending would recover more slowly than previously assessed, said the central bank. On the other hand, public spending is projected to be higher, while export of services is expected to expand more than the previous forecast due to the increasing number of tourists.
Higher-than-expected public spending and exports of services, however, could not compensate for the weaker-than-expected merchandise export performance and private spending.
Overall, economic growth in 2015 is projected to be less than formerly forecast, said the BOT. “In the period ahead, the economy is expected to gather pace in tandem with the trading partners’ economies, which would shore up Thai merchandise exports.”
The risks to the forecast for 2015 “are skewed to the downside,” said the release. “This is because the possibility of weaker-than-expected growth due to the impact of more severe slowdown of China and Asian economies is higher than the possibility of higher-than-expected growth from faster-than-expected disbursement of the stimulus package.
For 2016, the Thai economy is expected to register a better growth rate. The central bank revised its GDP growth estimate to 4.1% from 3.9% but lowered next year’s export growth forecast to 2.5% from 4%..
Photo: Takeaway
