World Bank keeps gloomy Thai outlook
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World Bank keeps gloomy Thai outlook

Thailand's economic growth is expected to decline moderately this year due to  high household debt and restrained exports, says the World Bank.

"Growth in Thailand is expected to slow to 2% in 2016 from 2.5% in 2015 as high household debt holds back consumption and export growth is subdued," the global development lender said in a statement.

"Policy uncertainty is likely to weigh on private investment."

It is estimated that Thailand's average GDP growth until 2018 will come in at 2.4%, according to the bank's "Global Economic Prospects" report.

The Bank of Thailand recently cut its economic growth estimate for 2016 to 3.5% from 3.7%, citing heightened downside risks such as drought, China's economic transition and the wider divergence of monetary policy among major economies.

But the central bank raised its growth forecast for 2015 to 2.8% from 2.7% on the back of increased public expenditure and private consumption.

A faster-than-expected slowdown in China is deemed as a risk to Thailand's economic growth, while the possibilities of greater financial market volatility and restricted credit are also concerns, the World Bank said.

A steep appreciation in the value of the US dollar and a slower-than-expected acceleration of high-income economies will also dent growth in the region, it said.

"State-owned enterprise reforms including measures to strengthen transparency and governance would reduce contingent fiscal risks in China, Thailand and Vietnam," the World Bank said.

Economic growth in East Asia and the Pacific is projected to slow to 6.3% this year from 6.4% estimated last year, with China's GDP expansion expected to ease to 6.7% from 6.9% projected in 2015.

East Asia excluding China is expected to see growth accelerate modestly to 4.8% in 2016 from 4.6% projected for 2015.

Slowing growth in China is expected to offset a modest pickup in growth among Asean members this year, the World Bank said.

However, it said the region was expected to benefit from the strengthening recovery in advanced economies, low energy prices, improved political stability and continued favourable conditions in global financial markets despite monetary policy tightening in the US.

Weak growth among major emerging markets will weigh on global economic growth this year, but economic activity should still pick up modestly to 2.9%, up from 2.4% last year, as advanced economies gain speed, the report said.

Global economic growth was less than expected in 2015 due mainly to falling commodity prices, flagging trade and capital flows along with episodes of financial volatility sapping economic activity, it said.

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