NESDB lowers GDP growth forecast to 3%

The board’s previous estimate for growth in gross domestic product was 3.8-4.3 per cent. NESDB secretary-general Arkhom Termpittayapaisith said headline inflation was expected to average 2.4 per cent this year. 

The economy is expected to improve next year along with the likely global economic recovery, with the NESDB’s growth estimate for Thailand at 4-5 per cent. This anticipates Bt66 billion in state investment for the water management programme and Bt160 billion for the transport-infrastructure plan. 

The International Monetary Fund projects global economic growth of 3.5 per cent next year. 

Headline inflation is expected to remain low in the Kingdom next year, in the range of 2.1-3.1 per cent, as the government will likely control product prices while global oil prices move in the range of US$100-$110 per barrel. 

According to the NESDB, this year’s third-quarter economy expanded 2.7 per cent year on year and 1.3 per cent from the second quarter. The quarter-on-quarter rise came after a 1.2-per-cent decrease in household spending and a 6.5-per-cent contraction in investment. 

In the first nine months, Thai GDP grew 3.7 per cent year on year.

Arkhom said the third-quarter growth came amid a 15.1-per-cent rise from the second quarter in tourism-related business, including hotels and restaurants. About 6.7 million tourists, particularly from China, Laos and Malaysia, came to Thailand in the third quarter and contributed revenue of about Bt320 billion. 

In the first nine months, the hotel and restaurant businesses combined recorded a 14.7-per-cent increase in revenue. 

About 26.2 million tourists are forecast to come to Thailand this year, a 17-per-cent rise from last year, which is expected to be a major driver for this year’s economic growth.

All estimates, however, exclude the local political factor. 

“The protests may affect travel in Bangkok. However, tourists could go to other provinces,” Arkhom said. 

Third-quarter exports recorded a 1.8-per-cent contraction to $57.96 billion (Bt1.83 trillion). However, export figures remained high in the automobile sector with a 7.2-per-cent rise, integrated circuits and parts with an 18.2-per-cent increase and petroleum products up 9.6 per cent. Meanwhile the agriculture sector suffered a 0.2-per-cent shrinkage, particularly from low rubber export.

In the first nine months, exports totalled $169.71 billion, up 0.2 per cent, while in baht terms export value dropped 2.4 per cent. 

Finance Minister Kittiratt Na-Ranong said he was disappointed with the third-quarter GDP growth of only 2.7 per cent, citing the delay in public investment as a reason.

“If the country’s GDP is Bt12 trillion, that means every Bt120 billion equals 1 per cent of GDP, so if the investment is delayed, GDP will be affected as well. The lower GDP, therefore, was not unusual, because we have said before that our growth is mainly driven by investment,” said the minister.

He noted that the third quarter of every year was not a great supporter of economic growth as it is the rainy season. Good signs would be seen in the fourth quarter, with the new fiscal budget. 

“However, the market is looking ahead to the economic outlook in 2014 rather than the remainder of this year,” he said.

Kittiratt, who is also a deputy prime minister, said it was not easy for the country to keep the high level growth seen last year, at 6.5 per cent, as that was compared with flat growth in 2011. 

Positive factors for growth next year include the recovery in the euro zone, while the Japanese economy has also shown good signs, he said.

He added that growing trade with the CLMV countries (Cambodia, Laos, Myanmar and Vietnam) was a benefit to Thailand, and maintaining that growth would depend on how Thailand can reinforce its connectivity with those countries.