As
political turmoil hits the economy, the Fiscal Policy Office (FPO), Bank of
Thailand and National Institute of Development Administration (NIDA) have all
cut their estimates for GDP growth this year, and fear it won't be much better
in 2014.
The FPO
now expects gross domestic product to post growth of 2.8 per cent this year,
down from the previous estimate of 3.7 per cent. Next year it should expand by
4 per cent, but could be held down by a slow global economic recovery.
Meanwhile,
the BOT sees a possibility of Thai economic growth below 4 per cent in 2014 on
concerns over political risks. NIDA noted that the economy slowed in the
current quarter after political tension rose. It now expects GDP growth of no
more than 3.5 per cent for the full year, with next year's estimate put at 4-5
per cent.
FPO
director-general Somchai Sajjapong said his office cut the 2013 forecast after
analysing the economic situation for the first 11 months, which was hurt by a
lack of recovery in the export sector in light of a sluggish global recovery as
well as lower domestic demand. It had projected GDP growth of 5.2 per cent at
the beginning of the year.
Next
year, public investment will likely be lower than previously expected because
of delays in budget disbursements for government mega-projects, he said.
However, tourism has continued expanding and economic stability remains strong.
Inflation and unemployment are low, while interest rates and the exchange rate
remain manageable.
Consumer
spending dropped last month, reflected by an 8.3-per-cent contraction in
value-added-tax collection and fewer passenger-car sales nationwide. Exports
shrank by 4.09 per cent year on year.
BOT
spokeswoman Roong Malikamas said November's export contraction was not
unexpected. However, she believes that exports will drive the economy in 2014
after the global economic recovery.
Local
political factors are also a risk to next year's growth, Roong said, adding
that if the conflict ends rapidly, it would be positive for Thailand.
Monitoring of the situation is needed, however, and it is possible for GDP
growth to be below 4 per cent next year, she said.
Somchai
said there remained other risks, including bad debts and the planned reduction
of the US quantitative easing programme. If consumption and investment slow
down further next year, that could affect the ability of borrowers to pay their
debts, a possibility that the central bank has to monitor closely, he said.
"Inflation
is not an issue for next year's monetary policy as the global oil price is
expected to remain stable. But monitoring of bad debts is needed."
Currently,
the overall rate of non-performing loans in the banking industry is 3 per cent;
caution would be needed if the figure rises to 5-6 per cent, he said.
Montree
Socatiyanurak, a director at NIDA, expects GDP to grow by 4-5 per cent next
year, fuelled by investments in preparation for the Asean Economic Community,
which will take shape in 2015, economic improvements in the United States,
Europe, Japan and China, and the Thai government's Bt2-trillion
transport-infrastructure project. Export growth is targeted at 8 per cent and
the baht is expected to stay around 30 per US dollar in 2014.
The
policy rate is expected to be stay at 2.25 per cent throughout 2014 on
anticipation of a likely rise of the rate late in the year, following the US
Fed Fund Rate.
Montree
expects the Stock Exchange of Thailand to be attractive in 2014, given its
fundamentals and listed companies' earnings growth. The SET Index is targeted
at 1,600 points