Siam Commercial Bank’s economic intelligence centre has slashed its gross domestic product (GDP) growth projection for 2013 to only 3.4%, from a previous forecast of 4%, the centre's chief economist Sutthapa Amornwiwat said on Thursday.
The revision was based on the facts that exports were up only 0.1% in the first nine months of the year, the slowdown in private consumption, particularly in the automobile sector, lower than planned government spending and the delays in the planned investment infrastructure overhaul and flood management projects, she said.
Ms Sutthapa projected economic growth for next year at 4.5% on the back of a recovery in the export sector, expecting export growth at 8% in 2014, and government investment in development megaprojects.
The centre’s chief economist expected the baht currency would move between 31-32 baht to the US dollar next year and that the value of the baht would fluctuate in line with the scaling down of the quantitative easing measures in the US, which will trigger capital outflow.
She warned that the private sector should brace for a possible rapid baht depreciation caused by foreign capital outflow, which is a risk factor that could derail economic expansion.
However, she said, the country’s economic fundamentals are strong enough to deal with any possible negative consequences.
The economist was confident that Thailand will not face the problem of a balance of payments deficit, as happened in 1997, on the back of strong fundamentals and a high level of foreign reserves, as much as 2.7 times the short-term overseas debt.
She believed the central bank’s monetary policy committee would keep its key policy rate unchanged at 2.5% throughout this year and next, due to less pressure from inflation and a decline in household debt.
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