UTCC raises 2012 economic projection
The University of Thai Chamber of Commerce's economic centre joins other houses in raising the Thai economic growth forecast this year, while showing concerns over inflation in light of recent oil spikes.
The Economic and Business Forecasting Centre raised the forecast from 4.7 per cent to 5.9 per cent, thanks mainly to the consumption and investment after the great floods.
Earlier, the National Economic and Social Development Board raised its projection for economic growth this year to 5.5-6.5 per cent, Kasikorn Research Centre jacked up its projection from 3.5-4.8 per cent to 4.5-6 per cent and Tisco Research from 4.5 per cent to 5 per cent.
Thanavath Phonvichai, director of the UTCC centre, said that the economy should expand as much as 9 per cent on year in the second half, against 2.8 per cent in the first half. While public and private investment would be the key drivers in the first half, the manufacturing sector, which is expected to fully recover in the third quarter, should chiefly boost the second-half performance.
"The economy would not show full recovery in the first quarter, as the manufacturing sector is struggling to resume normal operations. We expect the sector to operate at 50-70 per cent of capacity in the second quarter and 100 per cent in the third quarter," he said.
Meanwhile, soft loans worth Bt300 billion should be extended late second quarter, and this would help the economy register a growth rate of 9 per cent in the second half.
Quarterly GDP forecast
Q1 1.4%
Q2 4.2%
Q3 5.2%
Q4 12.8
2012 5.9%
The centre expected Thailand's exports to grow 10.3 per cent this year to US$248.65 billion, while imports will rise by 20.4 per cent to $243.144 billion.
However, it raised the inflation forecast from 3.8 per cent to 4 per cent, as a result of the higher oil prices.
The centre estimated that every Bt1 increase in diesel price per litre will dent the gross domestic product by 0.1-0.15 percentage point. Meanwhile, every Bt1 increase in petrol prices will hurt the GDP by 0.03-0.05 percentage point.
Thanavath is convinced that the Bank of Thailand would not lower the policy rate in the first half due to persistently high inflationary pressure. Two 25-basis points increases could take place in the fourth quarter, he said.
"There is no reason for a cut in the policy rate now, or inflation would spiral thanks to gradual economic recovery and public spending," he said.
