Ministry slashes growth forecast to 2%

Ministry slashes growth forecast to 2%

The Finance Ministry has revised down the 2014 economic growth forecast to 2% from its earlier forecast of 2.6% in March due to a higher-than-expected contraction of 0.6% in the first quarter.

The economic growth can exceed 2% if public spending is accelerated. — PATIPAT JANTHONG

More clarity in public investment, state spending and the fiscal 2015 budget will spur domestic demand, said Kritsada Jinavijarana, director general of the ministry's Fiscal Policy Office, on Wednesday.

Exports are projected to grow by 1.5%, driven by the recovering world economy and local tourism while imports are likely to contract by 5.2% despite accelerating demand in the second half.

Inflation will increase slightly from last year to 2.4% in line with raw material costs but LPG and diesel price fixes will help slow the rate.

Trade surplus will grow year-on-year, resulting in a current account surplus of $13.4 billion baht or 3.3% of gross domestic product.

"Among the risk factors are world oil prices in the wake of unrest in Iraq and Ukraine," said Mr Kritsada.

"The Thai economic growth can exceed 2% if the government speeds up disbursing the fiscal 2014 budget and public spending in the early part of fiscal 2015 while implementing measures to promote exports and tourism," he said.

Also on Wednesday the Office of Industrial Economics said June industrial output shrank 6.6% year-on-year, mainly for automobiles, hard-disk drives, garments, ornaments and air conditioners.

Capacity usage was at 60.61% last month.

The automobile sector was the hardest hit by the sapping domestic demand following the end of the first-time car buyer programme.

June's automobile production tumbled 26.10% to 160,452 units.

For all of 2014, automobile production will likely fall by 10.46% to 2.2 million units. Of the total, 1 million units will be for the domestic market, down by 24.59%, while 1.2 units are destined for exports, up 6.37%.

Output from the electronics sector slid by 0.05%. Hard-disk drive production fell 4.11% due to lower exports to China while other parts components increased.

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