Thailand's central bank has again cut the country's economic growth and export projections based on the domestic market's fragile recovery and chronic depression in the global economy.
"The central bank’s GDP growth forecast might be slightly lower than 3%," said Roong Mallikamas, a senior director of the macroeconomic and monetary policy department.
Greater downside risks to growth in the second half were indicated by the central bank’s downward fan chart, she said, with growth recovery prospects projected to gradually increase.
A slow economic recovery in China and other Asian economies, a shift in global trade affecting Thai exports, and lower than expected public expenditures are key downside risks, noted the central bank’s Monetary Policy Report published in June. Its new forecast will be announced Sept 25 when the next report is published.
The central bank previously trimmed its GDP forecast to 3% from 3.8% in June, predicting shipments would shrink by 1.5%.
China’s slowdown has affected Thai shipments and the central bank expects the slow recovery momentum will continue to dent export growth, said Mrs Roong.
"We do not expect export growth this year to contract by only 1.5% any more," she said.
Mrs Roong said its export forecast would be in a similar fashion as the Fiscal Policy Office’s projection of a 4% contraction.
The Commerce Ministry announced on Monday exports tumbled 7.87% year-on-year in June, resulting in a 4.87% contraction in the first half this year. Export value in US dollar and baht terms declined by 5.5% and 3.1% in the second quarter, respectively, she said.
Although the impact of a weaker baht on import value is a concern, business operators still believe imports will continue as long as domestic demand exists, according to a central bank survey.
Economic growth on a quarterly basis in the second quarter is expected to remain positive, she said. The National Economic and Social Development Board will announce Thailand’s GDP growth in the second quarter on Aug 17.
If rainfall continues it could alleviate drought effects, but further monitoring is warranted to assess the consistency and quantity of precipitation, said Mrs Roong.
A continuous decline in nominal farm income on the back of falling prices of agricultural produce has affected rural consumption, she said, noting how ebbing rubber prices have taken a toll on private consumption in southern provinces.
Economic activity in the second quarter was slow because of softer private spending, sluggish merchandise exports, and lower private investment and manufacturing output.
The Private Consumption Indicator fell by 0.8% year-on-year from April to June, down from 0.7% growth in the first quarter. The manufacturing production index declined by 7.6% year-on-year in the second quarter, down from 0.1% growth in the preceding quarter.