The Asian Development Bank has slashed its economic growth projections across Southeast Asia for this year, but Thailand still looks to exports and the tourism sector to boost GDP growth in the final quarter.
A huge screen displays world stock indices at the Hong Kong Stock Exchange on Wednesday. (AP photo)
The GDP growth estimate for Thailand this year has been scaled down from 4.9% to 3.8%, Luxmon Attapich, senior country economist at the ADB's Thailand resident mission, said on Wednesday.
Thailand's economic growth figure in the first half of the year was lower than earlier expected. In addition, the slowdown in exports was more severe than the previous forecast, with projected export expansion of only 2% this year, she said.
The ADB's forecast is in line with the National Economic and Social Development Board and the Fiscal Policy Office, which have already slashed their 2013 expansion projections.
The NESDB trimmed its forecast to between 3.8% and 4.3% from 4.2% to 5.2%, while the FPO lowered its estimate to between 3.5% and 4% from 4-5%.
Ms Luxmon projected GDP growth for 2014 at 4.9%, assuming the government will increase disbursement of funds for its 350 billion baht water resources management projects. The investment in the 2-trillion baht infrastructure development projects would help spur the economy in 2014 and in following years, she added.
The ADB would keep a close watch on any possible delays in the government's investment projects, which would affect the country's economic expansion next year, and also the risk that economic growth in industrialised countries, including China, would be lower than expected, and that political conflict could again spark turmoil.
Ms Luxmon expected exports to grow by 7-8% next year on the back of a recovery in the global economy. This would also help boost private investment.
The NESDB expected the recovery of Thai exports in the fourth quarter due to positive signals of the global economy, Arkhom Termpitttapaisith, the board secretary general, told economic ministers in a meeting on Wednesday.
Deputy Prime Minister Kittiratt Na-Ranong stressed the importance of the final three months for the Thai economy as exports normally picked up and it was high season for the tourism sector.
"GDP in the fourth quarter is significant because it is the high season for both exports and tourism, while the government need to stabilise the exchange rate and prices," he said.
The tourism sector enjoyed robust growth this year to offset lower spending by locals and lower export growth. The country was the destination for 17 million foreign tourists from January to August, a 21% jump from 14 million of last year, according to the Tourism Department. The country is on course to reach the target of 24.5 million tourists by the end of this year given it is entering the high season for the sector.
In the Asian Development Bank Outlook report released on Wednesday, the Manila-based lender said it expects the region's emerging economies to grow by 6% this year, down from 6.6% predicted in April.
The ADB also cut its 2014 growth forecast, to 6.2% from 6.7%.
"Developing Asia is challenged to sustain its growth momentum," the bank said.
The report covers 45 developing or newly industrialised countries in Asia and the Pacific but excludes Japan.
The ADB said growth in China is softening after authorities took action to rein in credit growth and the shadow banking industry, part of a wider effort to reorient the economy away from exports and investment and toward more sustainable domestic consumption.
"Slower growth is the price of structural reform for the longer term," the report said.
China's economy, the world's second biggest, is now expected to expand 7.6%, down from 8.2% forecast earlier this year.
The country's communist leaders are trying to reverse a painful, extended slowdown that dragged growth down to a two-decade low of 7.5% in the second quarter.
In India, growth is slowing because industry and investment are hindered by poor infrastructure and long delays in structural reforms, the bank said in cutting its forecast to 4.7% growth from 6%.
The bank also lowered its Southeast Asia forecast because of lacklustre exports and moderating investment in Indonesia, Thailand and Malaysia, though stronger than expected growth in the Philippines partially offset the decline.
The region growth outlook was also hurt by nervousness that US Federal Reserve policymakers were planning to scale back their monetary stimulus programme, the bank said. The worries rocked financial markets in some countries including India and Indonesia, where stocks and currencies tumbled as foreign investors started pulling funds out on the expectation of higher returns back home.
The turbulence triggered fears that it would lead to a wider meltdown similar to the 1997 Asian financial crisis, but the ADB said such fears were "unwarranted" because countries have since beefed up their foreign currency reserves, strengthened economic management and tightened financial regulation and supervision.