The Thai economy is at risk of slower growth if China and the European Union continue to drag down the global economy, the University of the Thai Chamber of Commerce (UTCC) said on Monday, cutting its projection for GDP growth to 4.3% in 2013.
The university in February predicted economic growth of 5% for the year.
Thanavath Phonvichai, UTCC’s vice president for research, said the Thai economy remains at risk of slower growth by the end of this year because of the continuing world economic slowdown, especially in China, weakened domestic consumption, growing concern about the political situation, and burgeoning household debt.
Exports were now estimated to grow only 4% this year, to about US$235.42 billion, way below the growth target of 7-7.5% set by the Commerce Ministry. The government's 350-billion-baht water management plans were also subject to delay because of legal disputes.
The Administrative Court has temporarily halted the water management projects, ordering the government to hold public hearings, as required by law, before hiring companies to undertake the work, even though bidding has been completed.
“Thailand's economy is expected bottom in the third quarter before recovering in the fourth quarter, driven by global economic recovery,” he said. “We project this year Thailand will see a current account deficit for the first time since the economic crisis in 1997, with the figures estimated at $975.8 million, or 0.2% of gross domestic product.”
He warned that long term Thai economic growth would be hit over the next 3-5 years if the government's 2-trillion baht infrastructure investment plans falter.
The concern on external factors is also resulting in a significant drop in the Thai stock market. The Stock Exchange of Thailand has been trading in the negative zone. It closed at the lowest point at 1,404.46, 36.69 points or 2.55% down from Friday’s close with total trade value of 41.8 billion baht.
Stock analysts say most investors are still worried about the cash crunch in China that may impact the country’s economic expansion while the US sees improved hiring in the non-farm sector, triggering the signal that the Federal Reserve may slow down its bond-buying programme, otherwise known as quantitative easing (QE).
Teerada Charnbingyong, an analyst at Phillip Securities, said the Thai equity market was moving in line with other bourses in the region due to the concerns on slower economic growth in China. The weakening Thai baht may result in capital outflow, putting more pressure on the Thai market.