Thailand forecasts 5.5pc GDP growth next year
Sunday, 29 June 2014
BANGKOK, June 28 (Reuters): Thailand's central bank cut its export growth forecast for this year to 3.0 per cent from 4.5 per cent, raised its inflation forecast and said this year's current-account surplus should be much larger than earlier projected.
The Bank of Thailand (BOT) also forecast that the economy will expand 5.5 per cent next year. Earlier this month, when cutting the 2014 growth forecast by nearly half to 1.5 per cent, it said 2015 expansion should be more than 5.0 per cent.
Mathee Supapongse, senior director, macroeconomic and monetary policy department, told a briefing that after a likely contraction in the first half - earlier forecast at 0.5 per cent, the economy "is expected to have a V-shape recovery in the second half, and returning to its potential before long."
The BOT projections and comments came one day after the government reported worse-than-expected export and factory output data for May, showing that the pillars of the economy remained weak and the military government faces a tough task kick-starting the economy.
On May 22, the Thai army seized power in a bid to restore order and get on track a stumbling economy battered by tepid exports, weak domestic demand and reduced tourist arrivals. In January-March, Southeast Asia's second-largest economy shrank 2.1 per cent from the previous three months.
In first five months, tourist arrivals dropped by 6 per cent from a year earlier. The sector accounts for 10 per cent of the economy.
In Friday's set of fresh BOT projections, the biggest surprise was the change in the current-account projection.
In March, the central bank forecast a surplus of $0.7 billion. Now it sees a $11.7 billion surplus, which would contrast starkly with 2013's $2.8 billion deficit.
Mathee said the big increase in the anticipated 2014 surplus "is mainly due to an economic contraction in the first half, which has also caused a slump in imports."
Exports are equivalent to more than 60 per cent of the Thai economy, and the country is a regional hub and export base for global automakers and a major producer of hard disk drives.