Agencies expect improvement to economic performance in current half
THE GOVERNMENT'S economic ministries believe the economy will recover during the remaining months of the year, as they put in support measures to shore up exports of manufactured and agricultural products.
Meanwhile, Somdet Susomboon, director-general of the Office of Trade Policy of the Department of International Trade Promotion, said the department might lower its forecast for 2013 export growth to 2.68 per cent, as growth in the first seven months was only 0.6 per cent year on year. It will announce any revision on September 23.
He made the remark to the House of Representatives’ economic development panel, which invited state agencies in charge of the economy to update it. The Commerce Ministry’s current official growth forecast for export this year is 7-7.5 per cent.
Commerce Minister Niwattum-rong Boonsongpaisan said yesterday after a meeting of economic ministers that the economy was expected to see year-on-year improvement in the third and fourth quarters. His ministry is attempting to boost exports of high-potential products to high-potential markets while finding ways to shore up shipments of products that have seen slowdowns. Such products include machinery, electronic parts, rice, shrimp, frozen chicken and rubber.
According to Niwattumrong, who is also a deputy prime minister, the economic team may allow state agencies to extend their budget-disbursement period to December. About Bt70 billion to Bt80 billion of the government’s budget may have been disbursed by this month, while another Bt110 billion may be disbursed during the remaining months.
Combining that outlay with disbursements for the first quarter of fiscal 2014 (October-December 2013), about Bt700 billion to Bt800 billion will likely be poured into the economy during the final three months of the calendar year, he said.
The borrowing bill for the Bt2-trillion transport-infrastructure project may be reviewed by Parliament in the third week of this month and if it gains parliamentary approval, that could boost foreign investors’ confidence in Thailand, he said.
Rubber
Niwattumrong said Prime Minister Yingluck Shinawatra was keen to raise local usage of rubber to solve long-term difficulty in that industry. There will likely be a meeting this week or early next between Yingluck and rubber-processing industries to discuss this issue.
In a related matter, according to the minutes of the August 21 meeting of the central bank’s Monetary Policy Committee published yesterday, gross domestic product is expected to expand less than previously assessed, both this year and in 2014.
This is based on the risk of delays in planned government stimulus and moderation in private consumption and exports longer than previously expected.Six of the seven MPC members agreed to maintain the policy interest rate at 2.50 per cent as they deemed the current accommodative monetary policy as necessary and appropriate to support growth, while one member voted for a rate cut of 25 basis points.
The economy continued softening in the second quarter and GDP growth was broadly in line with the committee’s expectation of a short-term slowdown, the minutes said.
Domestic demand and exports were expected to recover gradually, although supply-side constraints could restrain growth and limit exporters’ competitiveness in the world market, which has been recovering gradually, the minutes said.
Private consumption of durable goods and automobiles continued to decline after the end of the government’s first-car tax-rebate measure, while some increase in bad loans and tightening of credit standards for consumer lending could drag consumption of durable goods down further.
Movement of the baht could hinge on timing of the Federal Reserve’s tapering of its quantitative easing and the economic outlook of major countries, including China, and those in the region.
The US economy expanded on the back of manufacturing and housing sectors and growth resumed for the euro area in the second quarter, the first expansion since the third quarter of 2011.
Japan expanded at a gradual pace thanks to the government’s economic stimulus policies, while China saw economic moderation in the second quarter, with recent indicators pointing to some improvement. Asia’s domestic demand slowed down and exports generally remained weak.
The minutes said global inflationary pressure remained low and most central banks kept their policy rates unchanged. Thailand saw lower-than-expected headline and core inflation in July.
