BOT cuts growth forecast amid falling exports, delay to recovery
The Bank of Thailand today (December 18) lowered its GDP forecast for this year and 2020, due largely to continuous export contractions and slower economic recovery than previously expected.
The central bank revised downward its forecast of economic growth to 2.5 per cent this year from 2.8 per cent while the forecast for next year was cut to 2.8 per cent from 3.3 per cent.
The central bank cited deeper export contractions and delay to an economic recovery for the lower projections. Headline inflation rate is expected to remain at a low level of 0.7 and 0.8 per cent for this year and next.
Thai exports were hit by the global slowdown and impact from the US-China trade war, in addition to structural changes in production which have eroded the competitiveness of Thai products.
Exports are expected to drop by 4.8 per cent this year, down from the previous projection of 2.3 per cent while a mild growth of 1.4 per cent is seen for next year, compared to an earlier forecast of 2.3 per cent.
Expansion of public investment at 1.7 per cent also fell below the previous projection of 2.5 per cent for this year.
With regard to private investment, it is expected to post growth of 2.5% this year, down from the earlier estimate of 3 per cent. Growth forecast for next year has been cut to 3.4 per cent from 4.8 per cent.
Meanwhile, growth in household consumption this year is expected at 4.4 per cent, up from the previous forecast of 3.8 per cent, but an expansion of just 3 per cent is projected for next year, down from 3.1 per cent. High household debts, less employment opportunities especially in the manufacturing sector and a drop in incomes would combine to make consumers more cautious on spending.
The central bank foresees continuous expansion in tourist arrivals, estimated at 39.9 million and 41.7 million for this year and 2020, up from 38.3 million last year.
The central bank expected Dubai’s oil price to stay at $63.4 per barrel this year before dropping to $ 62.5 next year, down from an average of $69.6/barrel last year.
Thailand's current account surplus is estimated to remain at a high level of $35.2 billion this year and $30 billion in 2020, up from $28.5 billion last year.
