FPO cuts 2019 growth forecast

FPO cuts 2019 growth forecast

Global slowdown takes toll on exports

The Fiscal Policy Office (FPO) has reduced its 2019 economic growth forecast to 3.8% from 4% as slower global economic growth takes a toll on exports.

The lower estimate came after merchandise shipments in US dollar terms shrank 1.6% for the first three months, compared with the target of 2% growth, said director-general Lavaron Sangsnit.

The 3.8% growth estimate assumes 3% growth in the first half and 4.5-4.6% in the latter half, he said.

The FPO's new economic forecast is in line with the Bank of Thailand's current projection of 3.8% and the National Economic and Social Development Council's estimate of a range of 3.5-4.5%.

Thailand's GDP for the first quarter is due to be released May 21.

Mr Lavaron said the economy of 15 trade partners expanded at a slower clip than expected. The growth forecast of the 15 trading partners is slashed to 3.59% this year from 3.75% projected in January, he said.

"Any chance the economy will expand at 4% largely hinges on exports. The government might not need to do anything [to reach 4%] if exports fare well in the second half," said Mr Lavaron.

The Sino-US trade spat has taken a bite out of exports and overall economy, though state investment and tourism sector remain bright spots.

The IMF recently said concerted stimulus measures could be required from world leaders as the global economy is slowing more than expected.

Amid the softer global economy and heightening local political uncertainties, the government will soon launch a stimulus package, including a 20,000-baht tax break for tourism spending, a tax-related measure to boost residential property purchase, a tax deduction for student uniforms and equipment and a similar subsidy for welfare smartcard holders to help alleviate parents' burden. The impending stimulus is aimed at preventing the economy from growing far below its growth potential of 4%.

The Thai economy expanded at the quickest clip in six years at 4.1% last year, compared with a revised 4% for 2017.

Mr Lavaron said the economic stimulus worth tens of billions of baht, which will seek the cabinet's approval today, is estimated to boost the economy by 0.1 percentage point.

"The measures would prop up the economy, not stimulate it as growth is estimated to marginally expand at a slower pace than expected. A lavish budget is not needed," he said.

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