GDP growth forecast lowered to 1.4 per cent
The Fiscal Policy Office (FPO) has lowered projections for the country's gross domestic product (GDP) growth in 2014 from 2 per cent to 1.4 per cent, the lowest since the 2011 flood crisis, due to the poor performance of the export sector, which is predic
Thailand’s economy has contracted by 0.1 percentage point in the first half of the year and the FPO expects the second half of this year to expand by 2.9 per cent while the expansion range for the whole year is 1.2 to 1.7 per cent.
"The weaker-than-expected performance of the export sector is the major factor why we have lowered our GDP growth projection for this year," said FPO director-general Kritsada Jinavijarana.
However, the economic performance in September and in the third quarter of this year has slightly picked up, thanks to the increase in domestic consumption and the number of inbound tourists when compared to the previous quarter. The Office believes that continuation of the global economic recovery and the increase in government spending along with their investments on infrastructure next year would allow the economy to expand by 4.1 per cent (range 3.6-4.6 per cent) in 2015, he said.
The government’s collection of value-added tax has increased by 4.1 per cent when compared to last year, which is higher than the 0.9 per cent contraction in August and this is a clear sign that domestic consumption has increased he added.
Chance to further expand
Kritsada also said that the economy has a chance to expand more than the 1.4 per cent expected for this year to no more than 1.7 per cent if the government’s budget disbursement rate, especially the investment budget, in the last three months of 2014 fiscal year accelerates beyond the expected at 88.2 per cent.
The Office’s prediction for the rate of disbursement of the fiscal 2015 state budget is at 92.8 per cent where the rate of disbursement for fixed spending is at 97 per cent and investment disbursement rate is at 73 per cent while the FPO expected the government’s spending on investment to increase by 10.7 per cent next year, a tenfold increase when compared to the 1 per cent expected for this year.
For this year and the next, FPO
expects export value to contract 1 per cent for 2014 and between -1.5 to -0.5 in 2015 as they expect the prices of products and crude oil to continue to decrease next year. They predict the price of oil to be US$101 per barrel by the end of 2014 and $100 per barrel by the end of 2015.
The Office also predicted the baht to depreciate next year to be around Bt32.4 per US dollar by the end of 2014 and around Bt32.7 by the end of 2015.
