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UTCC trims GDP growth forecast to 3.1 per cent

Sep 10. 2015
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THE UNIVERSITY of the Thai Chamber of Commerce projects that gross domestic product will grow by 3.1 per cent this year and by 4.2 per cent next year amid uncertainty over the global economy and the general election being delayed until 2017.

It had earlier projected GDP growth of 3.2 per cent this year. The economy is expected to grow more slowly because of sluggish export growth and low investment.

However, with the government’s economic stimulus package, the economy will not be affected too heavily by negative factors this year and next, said Thanavath Phonvichai, director of the UTCC’s Economic and Business Forecasting Centre.

 He said that without the government package, the economy might have grown by only 2.5-2.9 per cent this year because of the impact of the drought, falling crop prices, and the bomb attack at Bangkok’s Ratchaprasong Intersection, which affected investor confidence.

 For this year, the centre foresees exports facing a serious contraction of 4.8 per cent, while imports are forecast to shrink by 8.1 per cent.

In the agricultural sector, the centre predicts grow of 4 per cent this year, while the industrial sector is expected to expand by 2 per cent.

Private consumption is forecast to increase by 1.9 per cent and private investment by 2.4 per cent.

The number of foreign tourists is forecast to reach 29 million, while inflation for the whole year is expected to be minus-0.6 per cent.

 For 2016, the centre forecasts that GDP could grow by as much as 4.5 per cent or as little as 3.9 per cent.

Along with the government’s stimulus package, other positive factors tipped to drive up the Kingdom’s growth are the stable political situation, stronger tourism growth and stronger investment growth as a result of Asean integration and the special economic zones.

The expansion of fourth-generation telecom services in 2016 and the continuation of the government’s budget disbursement for the 2016 fiscal year will also help boost growth, Thanavath said.

However, there are still concerns that could affect growth next year including uncertainty over global economic growth and the high debt problem among Thais.

In addition, the UTCC’s study found that small and medium-sized enterprise competitiveness had been affected by the slowing of the economy.

Thanavath said many SMEs had lost liquidity from lower consumer purchasing power, while some businesses could not adapt to tougher competition.

The centre projects that the SME sector will grow by 2.2 per cent this year.

Positive factors promoting SME expansion are the government’s stimulation plans and more investment in border provinces under the special economic zones.

Negative factors predicted to hinder SME growth are a slowing of exports, the drought, and the bomb attack in Bangkok affecting confidence in the country.

 The survey also found that the SME Health Index in the third quarter was down by 1.6 points compared with the second quarter to 45.6 points. An index score lower than 50 reflects weak performance.

More than 58 per cent of SMEs face a liquidity problem due to lower sales, tougher competition, delayed payments by customers, and cash payments to creditors.

 To support SMEs, Thanavath called for the government move forward with its investment projects, provide funds for SMEs to increase their liquidity, and control the cost of living.

 He foresees that the government’s measure to help SMEs by giving them soft loans totalling Bt200 billion will help increase the sector’s growth.

The SME Health Index could increase to 45.8 points in the fourth quarter, he added.

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