By Erich Parpart, The Nation/Asia News Network
The Nation/Asia News Network–The Bank of Thailand has slashed economic growth forecast for 2014 to 0.8 percent from 1.5 percent and for 2015 to 4 percent from 4.8 percent, because of lower-than-expected government spending and slow recovery of private investment, tourism income and export expansion. Exports account for 70 percent of Thai gross domestic product, so the poor performance of that sector contributed to the central bank lowering its economic-growth projection.
Exports now are expected to contract by 0.5 percent year on year in 2014, lower than its previous forecast of flat growth.
The forecast for export growth in 2015 was also cut to only 1 percent from the 4 percent estimated previously. ��A slower-than-expected expansion in all components (mentioned above) are responsible for the cut in GDP projections for 2014 and 2015,�� BOT assistant governor Mathee Supapongse said. However, the central bank believes that GDP in the fourth quarter of this year will expand by 2.7 percent over the previous quarter and more than 4 percent in the first three months of next year quarter on quarter. The Kingdom’s GDP was around US$387.3 billion as of the end of 2013. Domestic consumption accounted for 50 percent of GDP, government spending for 15-20 percent, and private investment for 15-20 percent. The commerce ministry had earlier said the country’s real exports in November contracted by 1 percent month on month. Exports in the first 11 months of 2014 contracted by 0.42 percent, compared with the contraction of 0.32 percent for 2013. ��Merchandise exports are likely to grow at a slower rate because of both external and internal factors such as weaker demand from Europe, Japan and China,�� Mathee said. He added that domestic production limitations, caused by structural problems within the sector, had lowered the country’s export competitiveness in some products while lower oil prices had made it less likely for the prices of agricultural products to increase in the near future.
Pimonwan Mahujchariyawong, deputy managing director at Kasikorn Research, said the BOT’s predictions showed that it believed economic growth next year would depend more on domestic demand led by government spending.