The Thai economy began to stabilise in August, with steady domestic consumption and private investment and a rebound in exports boosted by improving global demand, but the Bank of Thailand refuses to predict whether the economy is on a recovery path.
The central bank, however, at the Monetary Policy Committee's policy rate call on Oct 16 will revise down its 2013 economic growth forecast from 4.2% predicted in July following lower-than-expected economic indicators in July and August.
"It's difficult to say whether the economy is recovering. We're seeing signs of stabilisation in many economic indicators, but a slew of risk factors lies ahead," said Mathee Supapongse, the senior director for macroeconomic and monetary policy.
He said those risks include uncertainty over when the US Federal Reserve will start its stimulus tapering, whether the government can achieve its budget disbursement target for the October-December period and future court verdicts that could affect the economy.
The 2014 budget bill has been taken to the Constitution Court, while the opposition Democrat Party says it will lodge a complaint with the court if the 2-trillion-baht borrowing bill to finance the government's infrastructure megaproject development plan wins Senate approval.
The massive investment in the infrastructure projects is expected to jump-start the economy amid lacklustre domestic demand.
Recently, both the National Economic and Social Development Board and the Fiscal Policy Office (FPO) have slashed their 2013 expansion projections. The former has trimmed its forecast to between 3.8% and 4.3% from 4.2% to 5.2%, while the FPO has axed its estimate to between 3.5% and 4% from 4-5%.
Mr Mathee said exports rebounded to grow by 2.5% year-on-year in August from a 1.3% contraction in July thanks to a gradual recovery in global demand.
"The current account and trade balance recorded a surplus, while the capital account registered a deficit owing to outflows of foreign portfolio investment. The balance of payments posted a deficit overall," the central bank said in a statement.
Thailand also swung back to run a current account surplus in August at US$1.29 billion from a deficit of $1.64 billion in July.
Private consumption stabilised mainly from a pickup in consumption-based value-added tax collection as the private consumption index expanded by 0.6% year-on-year in August from July's 0.7% contraction.
The private investment index showed a drop of 4% year-on-year, a slight improvement compared with a contraction of 4.8% in July.
Mr Mathee said the contraction was due to a slowdown in imports of machinery and equipment in the electronics and automobile industries coupled with a decrease in commercial car sales.
The tourism sector continued to grow robustly, with 2.5 million foreign tourist arrivals, up by 28% year-on-year.