BoT and FTI lower 2013 growth projections
The Bank of Thailand has lowered its gross domestic product (GDP) growth projection for 2013 to 4.2%, from a previous forecast of 5.1%, Paibul Kittisrikangwan, assistant governor for monetary policy, said on Friday.
- Published: 19/07/2013 at 04:11 PM
- Newspaper section: news
Bank of Thailand governor Prasarn Trairatvorakul says the current benchmark interest rate of 2.5% is appropriate for prevailing economic conditions.
The export growth figure was also lowered from a previous projection of 7.5% to 4% for 2013, and from 10% to 8% for 2014, he said.
Mr Paibul said the revision of the GDP growth projection was based on the fact that the domestic and overseas demand for Thai products had both dropped, due to global slowdown and a reduction in government stimulus measures.
He said export growth was also lower than expected because of the weak global economy, adding that the slowdown in China had hit Thailand’s export sector particularly hard.
The central bank projected GDP growth for 2014 at around 5%, he said.
Earlier today, Payungsak Chartsuthipol, chairman of the Federation of Thai Industries (FTI), said the FTI had reduced its economic expansion forecast for the year to 4.8%, from an earlier projection of more than 5%, on the back of the global economic slowdown.
However, central bank governor Prasarn Trairatvorakul said on Friday that the economy would likely improve in the second half of the year, after a slowdown in the first and second quarters.
Dr Prasarn predicted that the third and fourth quarters of the year will be boosted by a continuing high rate of employment and stable personal incomes, and economic recovery in the US and Japan, which would push up exports.
He said that the policy rate of 2.5% was at a suitable level to enhance economic expansion. He added that even though growth for the year would be less than 5%, it did not pose a serious concern and was still in line with figures set out in the central bank's framework.
In a related development, the FTI said the Thai Industries Sentiment Index (TISI) for June went down to 93.1, from 94.3 reported in May.
Mr Payungsak attributed the drop to the domestic and global economic slowdown and a decline in overall orders, sales volume, output and business performance.
Concerns over economic risk factors, the slowdown in domestic consumption, political conflict and a lack of clarity on the government’s stimulus measures had also eroded manufacturers’ confidence, he said.
A slowdown in exports due to problems in the economies of Thailand’s trade partners, increasing production costs and lowered 2013 growth projections had trimmed industry confidence for the next three months to below the 100 level, he added.
He said a TISI score of below 100 showed there was low confidence overall in the industry sector.
Manufacturers want government to come up with measures to stimulate the economy in the second half of the year and to strengthen cooperation with neighbouring countries to expand markets for goods and services of small and medium enterprises (SMEs), said Mr Payungsak.
They also want the state to promote the consumption of locally made products, instead of importing of dangerous sub-standard products, and to help enhance the development of production technology for SMEs, he said.
Despite negative reports on economic indicators, car exports managed to increase last month.
Surapong Paisitpatanapong, a spokesman for the FTI's Automotive Industry Club, said on Friday that a total of 96,182 vehicles were exported in June, up 1.3% from June 2012 and an increase of 11.1% from May.
Vehicle export value for the month stood at 44.67 billion baht, down 3.84% on June 2012, Mr Surapong said.
Exports over the first six months of the year totalled 534,366 units, up 16.9% on the same period last year. Export value was up 10.9% to 240.81 billion baht.
Mr Surapong forecast car output over the next three months to Sept 30 at 633,231 units, up 2.2% from the April-June period but down 4.4% from the 662,321 units produced from July to September 2012.