World Bank cuts Thailand’s growth forecast to 4%

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bahtThe World Bank has reduced its economic growth projection for Thailand from 5 per cent to 4 per cent in 2013 given the slower-than-expected global economic recovery and the economic slowdown in China, its senior economist Kirida Bhaopichitr said on October 9.

She said the global impacts have plunged Thailand’s exports in the first half the year to expand at only 1.2 per cent and it is predicted that export growth for the entire year would be 2.5 per cent. Thai exports in the four remaining months should increase at least 4-5 per cent while imports will rise 6 per cent, she said, adding that domestic consumption has been slowed to only 2.5 per cent due to the completion of the governments tax incentives for first-car buyers.

She predicted a positive trend for the Thai economy in 2014, saying the country’s GDP should grow at 4.5 per cent given signals of strengthened global economy and the governments planned investment on mega infrastructure projects. However, the government should be wary of delayed disbursements of the 2014 budget which will have an impact on state projects, especially water management and the Bt2 trillion infrastructure development, she said. Higher household debts could also deter private consumption and result in less-than-targeted economic growth, she said.

Regarding the US economy, Kirida said the World Bank predicted that the US hiccup in its economic stimulus would lower its gross domestic product GDP growth by 2 per cent and the impact could be felt globally including East Asia. If the US GDP declines by 1 per cent, it will lower East Asia’s GDP by 0.5 per cent, but the World Bank could not evaluate the coming impact in case the US fails to postpone the debt ceiling deadline and pay its debt for the first time on October 17.

She predicted that foreign capital would flow out of Asia after the US reduces its economic stimulus through quantitative easing and the outflows could affect the bond and stock markets in the region as well as weaken the Thai currency. The Thai economy will remain strong and Thai financial institutions will be able to cope with the capital outflows, she said, adding that Thailand will lose 200 billion baht ($4.8 billion), or 2 per cent of GDP, if the government carries on with the rice pledging scheme. Two years of rice subsidies has cost the kingdom a total of 400 billion baht ($9.6 billion).

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Reading Time: 2 minutes

The World Bank has reduced its economic growth projection for Thailand from 5 per cent to 4 per cent in 2013 given the slower-than-expected global economic recovery and the economic slowdown in China, its senior economist Kirida Bhaopichitr said on October 9.

Reading Time: 2 minutes

bahtThe World Bank has reduced its economic growth projection for Thailand from 5 per cent to 4 per cent in 2013 given the slower-than-expected global economic recovery and the economic slowdown in China, its senior economist Kirida Bhaopichitr said on October 9.

She said the global impacts have plunged Thailand’s exports in the first half the year to expand at only 1.2 per cent and it is predicted that export growth for the entire year would be 2.5 per cent. Thai exports in the four remaining months should increase at least 4-5 per cent while imports will rise 6 per cent, she said, adding that domestic consumption has been slowed to only 2.5 per cent due to the completion of the governments tax incentives for first-car buyers.

She predicted a positive trend for the Thai economy in 2014, saying the country’s GDP should grow at 4.5 per cent given signals of strengthened global economy and the governments planned investment on mega infrastructure projects. However, the government should be wary of delayed disbursements of the 2014 budget which will have an impact on state projects, especially water management and the Bt2 trillion infrastructure development, she said. Higher household debts could also deter private consumption and result in less-than-targeted economic growth, she said.

Regarding the US economy, Kirida said the World Bank predicted that the US hiccup in its economic stimulus would lower its gross domestic product GDP growth by 2 per cent and the impact could be felt globally including East Asia. If the US GDP declines by 1 per cent, it will lower East Asia’s GDP by 0.5 per cent, but the World Bank could not evaluate the coming impact in case the US fails to postpone the debt ceiling deadline and pay its debt for the first time on October 17.

She predicted that foreign capital would flow out of Asia after the US reduces its economic stimulus through quantitative easing and the outflows could affect the bond and stock markets in the region as well as weaken the Thai currency. The Thai economy will remain strong and Thai financial institutions will be able to cope with the capital outflows, she said, adding that Thailand will lose 200 billion baht ($4.8 billion), or 2 per cent of GDP, if the government carries on with the rice pledging scheme. Two years of rice subsidies has cost the kingdom a total of 400 billion baht ($9.6 billion).

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