Thailand’s central bank trimmed its 2016 economic growth forecast on Friday, reflecting expectations of zero export growth and suggesting the military government will continue to struggle with a sluggish economy.
The Bank of Thailand at the same time nudged its growth estimate for this year up to 2.8% from a 2.7% forecast three months ago, citing likely better-than-expected government investment and private consumption. But the new forecast is still about half the rate it projected in its initial 2015 forecast issued in June last year, Reuters reported.
It lowered its 2016 forecast to 3.5% from 3.7%, due mainly to poor exports as trade partners have been slow to recover.
Exports, a key economic driver, are expected to fall 5.5% this year and remain flat next year, compared with the previous 2016 forecast of a 1.2% rise. Shipments shrank in both 2013 and 2014.
“Our economy relies quite a lot on exports,” BOT Assistant Governor Jaturong Jantarangs told a news conference. “It’s difficult for private consumption and public spending to offset that in the short term. We need private investment to speed up.” Sarun Sunansathaporn, senior economist at Bank of Ayudhaya, added: “Growth momentum will be stronger in the second half as infrastructure projects start to materialize.”
The military seized power in May 2014 to end political unrest but has struggled to turn around Southeast Asia’s second-largest economy, with exports and domestic demand still weak. Growth last year was just 0.9%.
Tax Deduction
The junta recently introduced various stimulus measures, including grants and soft loans for rural areas as well as credits for smaller firms.
It will also allow shoppers a tax deduction of up to 15,000 baht ($416) on taxable goods and services purchased from December 25-31. Finance Minister Apisak Tantivorawong said this could lift 2015 growth by 0.1 to 0.2 percentage point.
The central bank said it expected growth in the final quarter of 2015 of 2.7% year-on-year and 0.8% quarter-on-quarter. Official GDP data is due to be released in February.
The economy grew 2.9% year-on-year in July-September and 1% on the quarter, beating forecasts.
The central bank has left its benchmark rate steady at 1.50% after two surprise cuts earlier this year. It next reviews policy on February 3 and most economists expect no change for now amid benign inflation.
The BOT expects annual headline consumer prices to rise 0.8% next year after falling 0.9% this year.
