The Bank of Thailand Friday reined in its enthusiasm over the country’s economic prospects for next year, downgrading its earlier projection of 5.5% growth to 4.8%.
Chinese tourists visit the Grand Palace on Sept 4, 2014. To make vacationing in a country still under martial law a little more attractive, Thailand has offered tourists from China free visas. But the tourism sector has not recovered and affected the economic growth. (Reuters photo)
The central bank maintained this year's forecast of 1.5% gross-domestic-product growth, saying public spending will inject life into the economy.
But the BoT pulled back its earlier estimation of strong growth for next year, explaining it now thinks the economy will feel the pinch from slower-than-expected exports and a battered tourism sector.
Assistant bank governor Methee Supapongse, who chaired the Monetary Policy Group meeting, noted that even the BoT's 1.5% projection is lower than predicted earlier this year. The bank dropped its forecast from 2.7% in June's meeting.
Exports have grown slowly this year due to slower expansion of the global economy. The tourism industry was hit by political unrest, the declaration of martial law, and the May 22 coup, all of which discouraged foreigners from visiting the kingdom.
Many expect that the Sept 15 killing of two British backpackers on the Surat Thani province island of Koh Tao will deal the tourism sector another body blow.
The country expects 25.5 million to 26.2 million tourists this year, a drop from 26.7 million last year, according to the Tourism Department. But it hopes the sector would rebound to 30 million next year.
The BoT's new forecast for next year is in line with the Asian Development Bank. The Manila-based bank said on Thursday the gross domestic product growth next year would be 4.5%.
Deputy Prime Minister Pridiyathorn Devakula was even more conservative, saying on Friday that the economic growth next year would be in the region of 3% to 4%.
Domestic consumption and exports to other Southeast Asian markets and Asian countries largely China would be the engines to drive the Thai economy next year, said M.R. Pridiyathorn, who is in charge of economy for the government.
But the National Institute of Development Administration was upbeat about next year in its latest forecast released on Friday.
Nida expected the country would end this year with a 1.8% economic growth but would jump to 5.4% next year, thanks to better domestic consumption, public and private investments and a better export outlook.
''Exports are expected to improve as the US economy is recovering next year,'' it said.