Forecast set for upward revision in May
The central bank expects to raise its economic-growth forecast for 2012 in May thanks to last year's low base, rising domestic demand and recovery in manufacturing after the worst floods in decades.
However, risks to growth remain amid global economic uncertainties and the domestic political situation.
Bank of Thailand senior director Mathee Supapongse said: “It is highly likely that the central bank will revise upwards the Thai economic-growth forecast. Last year’s base is low and there are economic-stimulus measures from both public and private sectors.”
Thailand is on the path to higher-than-estimated growth in gross domestic product this year because of last year’s low base, public and private spending particularly on residential and industrial repairs, and investments in machinery. The manufacturing sector, including automobiles, electrical appliances and electronics parts, is projected to recover fully by the third quarter of the year.
The central bank’s GDP growth estimate for 2012 is 4.9 per cent.
The National Economic and Social Development Board (NESDB) recently upgraded its own 2012 forecast to a range of 5.5-6.5 per cent, from the previous projection of 4.5-5.5 per cent.
In 2011, Thailand’s economy expanded by 0.1 per cent, after growing 7.8 per cent in 2010, according to the NESDB. Last year’s growth figure missed the forecasts of economists and led to concerns among authorities.
The risks to growth remain with global economic uncertainties despite Greece getting another debt bail-out, US economic figures starting to show improvement and the US Federal Reserve pledging to maintain exceptionally low interest rates through late 2014, Mathee noted.
However, such external risks may not affect Thai exports on a large scale as the country has diversified to other export destinations, particularly in Asia, he said.
The domestic political factor is another major risk to growth, Mathee said. The Thai economy may not expand to its full potential as estimated if any negative political developments occur.
“It is difficult to predict politics and natural disasters. Many are concerned about the country’s economy, which may not expand to its full potential even though, in the past, the country continued its economic expansion even when political unrest erupted,” Mathee said.
Thailand’s inflation expectations have not fallen much given the government’s measures, including the Bt300 minimum wage, Bt15,000 minimum salary for fresh university graduates, collection of excise taxes, collection of a fee for the Oil Fund, and the risk of global oil prices rising on the back of tensions in the Middle East, Mathee said.
