The Asian Development Bank (ADB) has slashed its 2013 gross domestic product growth projection for Thailand from 4.9% to 3.8%, Luxmon Attapich, senior country economist at the ADB's Thailand resident mission, said on Wednesday.
Thailand’s economic growth figure in the first half of the year was lower than earlier expected. In addition, the slowdown in exports was more severe than the previous forecast, with projected export expansion of only 2% this year, she said.
Ms Luxmon was confident there would not be another economic crisis such as happened in 1997, as some people fear, despite Thailand facing a current account deficit of US$3.8 billion, or 3.5% of GDP, in the first half.
It was projected that the deficit figure would be minimal or even return to breakeven in 2014. The country has a high level of foreign reserves, adequate to accommodate imports over the next seven months, she said.
Ms Luxmon projected GDP growth for 2014 at 4.9%, assuming the government will increase disbursement of funds for its 350 billion baht water resources management projects.
The investment in the planned seven-year 2-trillion baht infrastructure development projects would help spur the economy in 2014 and in following years, she said.
The ADB would keep a close watch on any possible delays in the government's investment projects, which would affect the country’s economic expansion next year, and also the risk that economic growth in industrialised countries, including China, would be lower than expected, and that political conflict could again spark turmoil.
ADB is of the view that domestic consumption can no longer be a main economic mobiliser because consumer confidence indices were declining due to rising household debt, the senior economist said.
Therefore, government investment would be a major economic driving force. If there is no delay in the state’s investment projects, it would encourage more private investment as the current key policy rate at 2.5% is relatively low, she added.
Ms Luxmon expected exports to grow by 7-8% next year on the back of a recovery in the global economy. This would also help boost private investment.
She believed the government shutdown situation in the US would be short-lived and would not have any impact on Thailand, and that the US government will be able to settle the debt ceiling conflict.