UTCC cuts GDP growth forecast to 3.2%

The reduction followed the university’s projection of export growth at 0.4 per cent, down from its earlier estimate of 4.1 per cent. If, in the worst case, exports contract by 1 per cent, gross domestic product is expected to grow by just 1.9 per cent this year.

The director of the UTCC’s Economic and Business Forecasting Centre, Thanawat Polvichai, said GDP growth would depend mainly on exports. So if export growth is flat, GDP will likely grow by 2.9 per cent this year, and if exports expand by 1.5 per cent, the economy could grow by 4.1 per cent.

"Exports may find it difficult to recover this year, given the recent cut in the [estimate for] global trade growth from 5 per cent to 3.7 per cent. The [forecast for] global economic growth was also revised down from 4 per cent to 3.5 per cent.

"Thailand’s major markets, including China, the European Union and Japan, are tending to see economic slowdowns. All countries including Thailand have to face this situation," Thanawat said.

Thai exports are expected to rise by 3.1 per cent to the United States, 1.5 per cent to Europe, 6.8 per cent to China, and 4.8 per cent to Asean.

Imports are expected to rise by 2.2 per cent this year, with Thailand facing a trade deficit of US$4.58 billion (Bt148 billion).

The centre expects the number of foreign tourists to increase this year by 13.7 per cent to 28.2 million, with a 15.5-per-cent rise in tourism income to $1.32 billion. The current account is expected to be in a surplus of $3.82 billion. The baht is forecast to average 32-33 per US dollar.

The average global crude-oil price is expected at $60-$65 per barrel.

Private spending, investment

Private consumption is expected to rise 1.8 per cent, while private investment is forecast to increase 3.6 per cent. Agricultural production is projected to shrink 1.0 per cent, but the manufacturing sector is estimated to expand 3.2 per cent. Inflation is expected at 0.5 per cent.

According to a recent UTCC |survey, most business operators expect the Thai economy to make |a clear recovery in the fourth |quarter of this year, on expectations of 2.5-3 per cent expansion, Thanawai Thanawat said.

He said that to improve people’s purchasing power and speed up the economic recovery, business operators urged the government to accelerate its budget disbursement, stimulate domestic spending, provide assistance to the export sector and help the agricultural sector in terms of prices.

Survey respondents gave the military regime middling scores on its performance: 4.8 out of 10 for the social aspect, and 4.5 for the economic aspect. It was given 5.2 for the political aspect.

In the latter half of 2015, according to the UTCC’s assessment, the medical, beauty and health business is expected to rise to the top of the list of 10 rising stars, driven by people’s concern for their health concern and low prices. Other likely rising stars are tours and hotels, restaurants, educational services, life insurance, construction, information technology, commercial banking, logistics, and online media.

Among 10 declining businesses, agricultural machinery is expected to suffer the worst because of drought, low crop prices and higher costs of Thai-made parts and equipment. Others include retail, rubber processing, new and second-hand car sales, auto loans, installation of LPG (liquefied petroleum gas) equipment, LPG service stations, airliner leasing, frozen seafood, and textiles and garments.

Over the past three months, business operators have seen an average drop in sales of 11.93 per cent year on year, an 8.74-per-cent decline in purchasing orders and a 12.02-per-cent drop in export-oriented income, while production costs have gone up by 9.27 per cent on average.

Their problems include liquidity, financial issues and marketing activities, taxes and production technology amid Thailand’s still-sluggish economy.