MPC raises GDP forecasts in 2013-14

The 2014 projection is also raised upward from 4.8 per cent to 5 per cent, the MPC said in the April meeting minute.

Paiboon Kittisrikangwan, assistant governor of the Bank of Thailand (BOT) and secretary of the MPC, said in the statement that the revision owes partly to the higher-than-expected economic growth outturn in the fourth quarter of 2012. 

"Fiscal impetus is also viewed to increase, both from higher budgetary spending and the two-trillion-baht infrastructure investment plan that has become more concrete and is likely to be disbursed in the last quarter of 2013, earlier than assessed in the last report. This higher public investment should offset the moderating private demand momentum early this year. Over the projection period, the MPC views downside risks from the global economy to persist, but upside risks also increase given the possibility of faster disbursement of infrastructure investment outlay compared to the baseline scenario. The fan chart for growth is thus balanced, compared to the previous one that was downward-skewed," he said.

Meanwhile, inflation in the years is viewed to remain stable and close to the previous forecasts, but with risks tilted slightly to the upside. With growing demand and tightening resource constraints especially in the labor market, the pass-through of cost may be higher than in the past. Inflation fan charts are thus slightly upward-skewed, compared to the previous ones that were balanced.    

Headline and core inflation is revised slightly downward from 2.8 per cent to 2.7 per cent and from 1.7 per cent to 1.6 per cent, respectively . Forecasts for next year are however slightly raised upward from 2.6 per cent to 2.7 per cent and from 1.6 per cent to 1.7 per cent, respectively.