SCB forecasts 4.5-5% GDP in 2013

Despite greater downside risks emerge from global financial volatility and weaker private spending, it said public investment, especially that under the water management projects - expected to be launched in the second half of this year, coupled with recovery in exports will keep the economy to expand 4-5 per cent this year.

SCB's Economic Intelligence Centre expected headline inflation to average 2.6 per cent this year, whereas the core inflation will remain low at 1.3 per cent. Inflationary pressure should remain low throughout the year as domestic energy prices stabilise on the back of steady world crude oil prices and the government’s price control measure, coupled with slowing domestic consumption. However, the government plan to gradually increase prices of LPG for households beginning later this year will likely put upward pressure on consumer prices.

The house foresees the baht to move in the range of 30-31 per US dollar in the remaining months of the year. The exchange rate will be volatile at least in the short run due to disruptive capital flows. 

Export looks set to grow slower than expected thanks mainly to the cooling down of the Chinese economy. Thailand’s export growth in the first 5 months this year stands at only 1.9 per cent, as exports to China shrank due to weakened demand for intermediate goods in China’s manufacturing sector. Although Thai export is likely to improve later in the year on the back of gradual recovery of the global economy, overall it will likely grow at a moderate pace this year.     

Private consumption likely slows further in the latter half of the year as the majority of cars bought under the first-time car buyers scheme have already been delivered. Meanwhile, the fluctuation in asset prices that follows sudden capital outflows and the reduction in the guarantee price in the government-sponsored rice pledging scheme will lower households’ purchasing power, resulting in a potentially slower growth in private consumption.