CIMB Thai to review growth forecasts
CIMB Thai Bank plans to review its growth forecasts for the Kingdom’s gross domestic product this year and in 2017 because the country is facing more risk from the global trade uncertainty following “Brexit”, UK citizens’ recent vote to leave the European
Amonthep Chawla, head of the bank’s research unit, said yesterday that CIMBT would unveil new economic-growth forecasts after second-quarter GDP growth is announced by the National Economic and Social Development Board on August 15.
CIMBT early this year targeted Thailand’s GDP growth this year at 2.7 per cent, and 2.8 per cent in 2017.
Amonthep said exports this year would continue to decline because of the global economic uncertainty from the Brexit vote. Another risk that will add pressure to the country’s economy is the plunge in imports, especially durable goods, which indicates the ongoing private investment slowdown. Durable goods account for 25 per cent of total imports.
Furthermore, the decline in foreign direct investment and the lower growth in business lending by the banking industry show that Thailand is in a slow growth pace.
CIMBT projects that private investment will grow by 1.9 per cent this year after declining by 3 per cent in three consecutive years.
Amonthep said the referendum on the draft constitution tomorrow was not expected to have an impact on investors’ confidence regardless of the results, because basically all they are hoping for is a return to democracy.
“No matter if the result is yes or no, the election is likely to be held by the end of next year or early in 2018. With the announcement of a clear road map for the election, confidence is likely to improve, leading to improving economic recovery,” he said.
However, he does not expect the recovery to be strong even if Thailand has a clearer political outlook. The economy will still face the structural problems of high household debt, delayed public investment, shrinking exports amid a weak global recovery and a lack of foreign direct investment to upgrade technology.
Thailand’s economic outlook largely depends on how much the confidence of investors and consumers picks up after signs of political stability, but it also continues to face the same risks as its regional peers from global financial uncertainty and weak recovery in major economies, he said.
He added that even though the baht might strengthen after the Bank of England on Thursday cut its policy interest rate, the Thai currency could weaken again as the US Federal Reserve is expected to raise its interest rate in December. If it does so, the baht could end the year at 37 against the US dollar.
