FPO trims forecast for 2016 growth
The Fiscal Policy Office (FPO) has marginally cut its forecast for this year's economic growth to 3.7% from 3.8% to reflect gloomy export prospects and the Chinese-led growth slowdown.
The FPO also cut its export value growth projection in US-dollar terms to 0.1% from 3.2% projected last October, director-general Krisada Chinavicharana said.
The Bank of Thailand late last year slashed its GDP growth forecast for 2016 to 3.5% from 3.7% due to a sharper growth slowdown in the Chinese and other Asian economies, adverse effects from geopolitical conflicts affecting both global demand and tourist confidence and a worse-than-expected local drought taking a toll on agricultural and industrial production. It also predicts exports will record flat growth this year.
Despite the downward GDP revision, the pace of this year's growth is expected to accelerate from last year, Mr Krisada said.
The FPO maintains the 2015 economic growth at 2.8%.
The National Economic and Social Development Board is due to announce the full-year GDP growth for 2015 on Feb 16.
The softer oil price has compelled the FPO to lower its headline inflation forecast to 0.3% this year from 1.8% predicted last October.
In the meantime, Kulaya Tantitemit, the Finance Ministry's acting adviser on policy and strategy, said the ministry had cut its growth forecast for 15 major trade partners to 3.56% from 3.7%.
The FPO has lowered China's growth projection to 6.6% this year from 6.8% previously forecast. As Thailand's main trade counterpart, China has a deep effect on the Thai economy.
The export contraction to China has resulted in the US passing the world's second-largest economy as Thailand's biggest export destination at 11.2%. Shipments to China stand at 11.1%.
Asean members, which are major exporters to China, had a combined share of 26% of Thailand's exports.
Exports, which make up 70% of Thailand's GDP, fell more than expected last year, declining by 5.78% in the biggest drop in six years. Shipments fell by 0.3% in 2013 and 0.4% in 2014 against rises of 2.93% in 2012, 15.2% in 2011 and 26.8% in 2010.
The FPO forecasts the baht will average 37.50 against the dollar this year, weakening by 9.5% from last year as a potential US Fed rate rise will discourage capital from flowing to emerging markets including Thailand.