Subdued economic activities foreseen

In the September 2014 issue of the Monetary Policy Report, the growth projection for 2014 is maintained at 1.5 per cent.

"The projection assumes risks in 2014 to be skewed to the downside, as exports could be affected by supply-side constraints more than expected, and government investment projects might not be expedited as much as expected," said Mathee Supapongse, assistant governor of the Bank of Thailand (BOT) and secretary of the Monetary Policy Committee (MPC).

At the monthly meeting, the MPC considered that the global economy continued to recover, but at a slightly slower pace than previously estimated, with greater growth differentials across regions.

Meanwhile, tourism has recovered more slowly than expected due to continued caution over domestic and international political situations.

The projection for 2015 is however lowered from 5.5 per cent to 4.8 per cent.

Merchandise exports and tourism are likely to contribute much less in 2015 than previously expected, which will lower overall economic growth, the central bank said.

Headline inflation in 2014 and 2015 is revised down in line with slow economic activities: from 2.6 per cent to 2.2 per cent in 2014 and from 2.5 per cent to 2.1 per cent in 2015. 

Meanwhile, core inflation - excluding energy and food prices - is also cut from 1.7 per cent to 1.6 per cent in 2014, and from 1.4 per cent to 1.3 per cent.