Export: SCB cuts forecast as shipments take a plunge

Sutapa Amornvivat, chief economist at SCB’s Economic Intelligence Centre (EIC), said yesterday that the government should speed up its Bt350-billion public investment to restore confidence, because private investment had become the driver of growth.
The government has disbursed only Bt1.2 billion from the Bt20-billion budget for water-management projects, she said.
The euro crisis is hurting the Asean market, which is a crucial one for Thailand. Exporters are now focusing on Asean to make up for the drop in exports to Europe. However, exports to Asean in August dived 12.3 per cent.
“We have to monitor the Asean market because export results showed a sharp plunge in August compared with September. Many products cannot recover, such as rubber and electronic components. Computer components used to grow but shrank worse than expected in August.
“So export growth this year will not go above 5 per cent, as we had expected. We decided to slash the [forecast for] growth of exports this year to only 4 per cent,” she said.
The momentum of the economy next year still needs to rely on domestic consumption and public investment rather than private investment, which used to boost the economy, Sutapa said.
The EIC projects private investment will next year rise only 5 per cent, the lowest rate since the economic crisis in 2008. It usually runs in the double digits. Private investment will slow in line with exports.
The government must play a bigger role in supporting the economy, as exports will not likely help strengthen gross domestic product next year, the centre believes.
The government has to do more to stimulate the economy, especially domestic consumption and investment, it said. If it cannot accelerate its mega-projects, it should launch short-term measures.
The EIC predicts that the government’s projects will make a visible impact in the second half of next year.
The gloomy export outlook and the delay in government projects have prompted the Bank of Thailand to cut the policy rate to fuel domestic consumption, Sutapa said.
The EIC believes the central bank will cut the rate by 25 basis points from 2.75 per cent in the last meeting of its Monetary Policy Committee late this year and again early next year.
The rate cut will help sustain retail lending next year.
However, retail loans might not expand more than this year when the government’s populist schemes were in full swing.