BOT says economy losing momentum, to cut growth forecast
The Bank of Thailand (BOT) said the "slow and fragile" economic recovery in April and the potential of a lower-than-expected growth in China might slow down Thailand's economic momentum, raising the possibility of the economic outlook for the second quart
Thailand’s economy in the first quarter expanded by only 0.3 per cent when compared to the 1.7-per-cent growth in the fourth quarter of 2014, according to data provided by the Office of the National Economic and Social Development Board.
“The economy is recovering but we will have to wait and see whether it is a decent or a slow recovery, as we are currently reassessing our economic and export projections,” said Roong Mallikamas, BOT’s senior director at the Macroeconomic and Monetary Policy Department.
“The economic momentum in the second quarter has slowed down compared to what we had previously assessed and the economic expansion in the second quarter would also determine the economic momentum in the next quarters,” she added.
The BOT is expecting to revise down its gross domestic product forecast for 2015 on June 10 from the current 3.8 per cent projection. Roong confirmed what BOT director of the Macroeconomic Policy Office Don Nakornthab had said earlier that Thailand’s export sector faced the risk of contracting for three years in a row.
“The expansion of the export sector will be around zero or lower than that this year,” she said.
BOT explained that households and businesses had stayed cautious last month as non-farm household income moderated and farm income was pressured by low agriculture prices and lower output. Private investment indicators have decreased slightly when compared to March despite lower cost of funding following the policy rate cut.
Meanwhile, merchandise exports continued to contract and the main culprit was the slowdown in the Asean market, which was impacted by the slowdown in China. The slow recovery in major trading partners, namely the US, Japan and Europe also contributed to the fourth consecutive month of export contraction since the beginning of the year.
Public spending, particularly capital expenditure for transportation and irrigation continued to disburse well but more spending on mega-projects was needed to boost private investment.
“The economic momentum would be delayed further [in the second half of the year],” Roong said.
