By ERICH PARPART
THE BANK of Thailand yesterday said it expected export expansion to be flat next year and had slightly lowered its prediction for growth in gross domestic product in 2016, from 3.7 per cent to 3.5 per cent.
The BOT forecast takes into account a greater slowdown in China’s and other Asian economies, the adverse impact of geopolitical conflicts on global demand and tourist confidence, and the severe drought in Thailand.
The BOT has, however, slightly increased its GDP growth prediction for 2015 from 2.7 per cent to 2.8 per cent on the back of higher-than-expected economic activity in the third quarter. This was attributed to the government’s stimulus measures and their trickle-down effects through the fourth quarter.
The central bank expects GDP to expand by 2.7 per cent this quarter year on year and 0.8 per cent quarter on quarter.
“The economic risks next year are less than the expected growth of major trading partners and the drought, which could have an impact on agricultural and industrial productivity,” said Jaturong Jantarangs, assistant BOT governor and secretary of its Monetary Policy Committee (MPC).
“The MPC is also monitoring a possible increase in the volatility of the global money markets from changes in the monetary policy of developed economies along with the continuity of government spending on investments and stimulus measures and its effect on domestic demand next year,” he said.
Nevertheless, the chairman of the Federation of Thai Industries, Supant Mongkolsuthree, said that even though China’s growth is not expected to improve from this year’s, there was still hope for Thailand’s export sector from the growing demand in CLMV (Cambodia, Laos, Myanmar and Vietnam) countries and the opportunity presented by the El Nino phenomenon next year.
“The prices of agricultural products could increase next year if the effects of El Nino are more severe than expected. If Thailand is well prepared for it in terms of water management, then we could find an opportunity from this,” he told The Nation.
He predicted that oil prices had bottomed out and could not go down any further from the current US$30-$40 per barrel. They could go up next year, which is another supporting factor for the expected increase of agricultural prices in 2016.
“China is already a large economy and it is not going to grow at the same rate as in past years, but there is hope in CLMV, India and even the Middle East if things calm down there. What we have to do is to try to capture these opportunities,” he said.
HSBC (Thailand) this week dropped its GDP growth prediction for next year from 3.3 per cent to 3.1 per cent as it expects the export recovery to be limited to around 2.2-per-cent growth in terms of volume and 1.4 per cent in terms of value. The BOT expects the sector’s expansion to be flat next year, which is lower than its previous prediction of 1.2 per cent.
HSBC also lowered its GDP growth projection for China for 2016, from 7.2 per cent to 6.7 per cent.
The Commerce Ministry reported last month that the export sector, which accounts for 65-70 per cent of Thailand’s GDP, contracted by 5.3 per cent in the first 10 months of this year when compared with the same period of 2014. Exports amounted to US$180.12 billion as of the end of October.
November export numbers will be revealed on Monday.