Govt spending in 1st quarter of FY 2015 likely to offset sluggish export: FPO
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But GDP won't pass 2% growth; forecast of shipment expansion higher than BOT's
The expected increase in government spending in the first quarter of the 2015 fiscal year should be able to compensate for the poor performance of the export sector and help shore up the economy, the Fiscal Policy Office says.
However, if export growth does not reach the FPO’s predicted 1.5 per cent this year, it will probably have to reconsider its economic-growth projection as well, which is currently sitting on the edge at 2 per cent.
FPO director-general Kritsada Jinavijarana said 2-per-cent growth in gross domestic product was the best that could be hoped for this year, but that would have to be supported by reasonable export performance. Still, the office does not believe GDP growth will dip below 1.6 per cent this year.
“If export growth in the final leg of this year cannot get to where we have forecast, the economic projection will not be the same as we announced earlier. But we still have to wait and see the effects of the government policies that will be implemented in last three to four months of this year,” he said.
“We still hope that the acceleration of the leftover [state] budget from 2014, worth around Bt100 billion, and the acceleration of the 2015 budget disbursement in the first quarter of the fiscal year, if fully implemented in a timely and efficient manner, will help compensate for the slowdown of exports and greatly support economic growth in the last quarter of the year.”
Currently the export sector is flat, but the FPO is not as pessimistic as the Bank of Thailand. Kritsada said his office saw some positive signs, though he did not reveal what they were.
The Commerce Ministry also unofficially lowered its previous export-growth prediction from 3.5 per cent to 0.5-1 per cent yesterday.
Kritsada said the current prediction for the rate of disbursement of the fiscal 2014 state budget was 88.2 per cent, lower than its target of 90.5 per cent, blamed on the “shutdown” by the anti-government People’s Democratic Reform Committee in the early part of the year.
Last week, the senior country economist for the Asian Development Bank, Luxmon Attapich, called the government’s target of more than 30-per-cent disbursement in the first quarter of the 2015 fiscal year “ambitious”. If achieved, though, it should be able to spur the economy in the final period of this calendar year, she said.
Pimonwan Mahujchariyawong, Kasikorn Research Centre deputy managing director, has commented that the target of more than 30-per-cent budget disbursement, which is higher than the normal average rate of 26-27 per cent, showed that the government wanted to stimulate the economy via fiscal policies.
She said that if the fiscal policies were effectively implemented, they should be able to help the economy this year.
The final quarter should also be supported by the expected return of tourists and the increase of private investment once there is more clarity on the government’s planned projects.
