Banks raise axe on 2013 economic forecasts

Banks raise axe on 2013 economic forecasts

Cuts of up to one point, more for exports

Commercial banks have joined policymakers and state agencies in revising down the country's economic growth forecasts for 2013 amid clear signs domestic consumption and exports are losing momentum.

TMB Analytics, TMB Bank's research unit, plans to cut its gross domestic product (GDP) growth forecast for this year to between 4% and 4.5% from 5%.

It also plans to slash export growth projection to less than 5% from 7% now.

The revised forecasts will be announced officially this week.

Benjarong Suwankiri, head of the research centre, said uncertainty in the US and China, the world's two biggest economies, is the key risk factor for Thai exports.

Export-dependent China has been mired in an economic slump for years, while the US Federal Reserve will likely wind down its asset-buying spree soon following a set of upbeat economic data, raising fears of an exodus from emerging markets including Thailand.

As well, the Kasikorn Research Center (K-Research), a subsidiary of Kasikornbank, will lower its economic growth projection by 50 basis points from the current estimate of 4.8%.

K-Research, however, said it is still waiting for May's export data from the Commerce Ministry, due to be announced late this month, before finalising its adjustments.

The research house in February revised down both this year's GDP and export growth rates to 4.8% and 10.5% from 5% and 7.1%, respectively.

"We may trim forecasts for both for the second time this year due to the changing situation and weaker-than-expected economic data [particularly first-quarter GDP growth]," managing director Charl Kengchon said, adding that K-Research will finalise iys economic review in mid-July.

The SCB Economic Intelligence Center, a subsidiary of Siam Commercial Bank, is also poised to revise down a set of economic forecasts. Earlier, the research house forecast the country's economic growth at 5%, exports at 7.1% and a foreign exchange rate of 28.50/29.50 baht to the US dollar at year-end, said chief economist Sutapa Amornvivat.

It is closely monitoring the global situation to determine the Fed's monetary easing stance, especially the Federal Open Market Committee's policy rate call during its meeting tomorrow and Wednesday.

The decision will affect foreign capital movements, which currently head for the US market, strengthening the greenback and weakening the baht.

A stronger dollar means borrowing costs are escalating, but foreign capital is expected to return to Asia including Thailand in the medium term due to its strong economic fundamentals, said Ms Sutapa.

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