HSBC slashes Thailand’s growth outlook

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HSBC signBanking giant HSBC has cut its expansion forecasts for Thailand to 2.8 per cent this year and 4.4 per cent in 2014 after sluggish economic growth in the first half of 2013.

HSBC previously projected that Thailand’s gross domestic product (GDP) would expand by 5 per cent in 2013 and by 6.2 per cent in 2014.

The economy shrank by 0.3 per cent quarter-on-quarter in the second quarter of 2013, sending the country into a technical recession, following a revised 1.7 per cent contraction in the first quarter.

On an annual basis, economic growth in April-June slowed to 2.8 per cent from a revised 5.4 per cent in January-March due mainly to tepid domestic demand and weak exports.

The end of tax incentives under the first-time car buyer scheme and swelling household debt have been blamed for lukewarm domestic consumption. The National Economic and Social Development Board, the government’s think tank, has lowered its 2013 GDP growth estimate to a range of 3.8 to 4.3 per cent from a range of 4.2 to 5.2 per cent.

The Bank of Thailand next month will likely also revise down its GDP growth forecasts from 4.2 per cent this year and 5.0 per cent next year.

The government should allocate more of its budget to ensuring more sustainable growth, said HSBC’s Asean economist Su Sian Lim. But Thailand is expected to recover in the second half after slipping into a technical recession in the first half, Lim said.

“I don’t feel that the fundamentals of the Thai economy have collapsed. It’s a story of overshoot in 2012 and undershoot in 2013. The 2014 economy could return closer to trend growth,” she said, adding that the economy is adjusting after the government’s domestic stimulus measures lapsed.

The modest economic recovery of the US, China and Japan bodes well for Thai exports, expected to begin bouncing back in the final quarter. HSBC estimates Thai exports will grow by 3.3 per cent this year and 6.7 per cent next year.

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Reading Time: 2 minutes

Banking giant HSBC has cut its expansion forecasts for Thailand to 2.8 per cent this year and 4.4 per cent in 2014 after sluggish economic growth in the first half of 2013.

Reading Time: 2 minutes

HSBC signBanking giant HSBC has cut its expansion forecasts for Thailand to 2.8 per cent this year and 4.4 per cent in 2014 after sluggish economic growth in the first half of 2013.

HSBC previously projected that Thailand’s gross domestic product (GDP) would expand by 5 per cent in 2013 and by 6.2 per cent in 2014.

The economy shrank by 0.3 per cent quarter-on-quarter in the second quarter of 2013, sending the country into a technical recession, following a revised 1.7 per cent contraction in the first quarter.

On an annual basis, economic growth in April-June slowed to 2.8 per cent from a revised 5.4 per cent in January-March due mainly to tepid domestic demand and weak exports.

The end of tax incentives under the first-time car buyer scheme and swelling household debt have been blamed for lukewarm domestic consumption. The National Economic and Social Development Board, the government’s think tank, has lowered its 2013 GDP growth estimate to a range of 3.8 to 4.3 per cent from a range of 4.2 to 5.2 per cent.

The Bank of Thailand next month will likely also revise down its GDP growth forecasts from 4.2 per cent this year and 5.0 per cent next year.

The government should allocate more of its budget to ensuring more sustainable growth, said HSBC’s Asean economist Su Sian Lim. But Thailand is expected to recover in the second half after slipping into a technical recession in the first half, Lim said.

“I don’t feel that the fundamentals of the Thai economy have collapsed. It’s a story of overshoot in 2012 and undershoot in 2013. The 2014 economy could return closer to trend growth,” she said, adding that the economy is adjusting after the government’s domestic stimulus measures lapsed.

The modest economic recovery of the US, China and Japan bodes well for Thai exports, expected to begin bouncing back in the final quarter. HSBC estimates Thai exports will grow by 3.3 per cent this year and 6.7 per cent next year.

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