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Asia Plus cuts 2013, '14 GDP growth forecasts

Asia Plus Securities has lowered its economic-growth forecasts for Thailand for both 2013 and 2014 because of slower-than-expected domestic demand and public investment.

The growth forecast for 2013 gross domestic product is cut from 4 per cent to 2.9 per cent. That is even lower than the average 3.5 per cent penned by local and international institutes. Standard Chartered Bank's forecast is now the most optimistic at 4 per cent, while the lowest belongs to JPMorgan Chase at 2.6 per cent.

Asia Plus said its new figure was "based on the assumption that the government's mega-projects will be delayed from this year". Other factors are prolonged political protests, the gradual recovery in the global economy, which pressures domestic consumer confidence, and slow household spending. The house believes the political chaos will have a serious impact on the tourism industry and spending in the final quarter of the year.

It explained that for 2013 GDP to expand by 4 per cent as in the previous projection, fourth-quarter GDP would have to rise by 4.3 per cent on top of the 3.7-per-cent growth in the first nine months of the year.

Meanwhile, the 2014 projection is also cut from 4.8 per cent to 4.3 per cent, mainly on the exclusion of investment under the government's Bt2-trillion infrastructure scheme from the forecast. While under this scenario total public spending will be at the same level as in 2013, the export sector should recover in line with a global economic recovery, contributing to growth of the overall Thai economy. The International Monetary Fund estimates that the global economy next year will expand by 3.6 per cent, from 2.9 per cent this year. Based on this, Asia Plus expects Thailand's exports to expand by 8.3 per cent, compared with 5.5 per cent this year, while imports will rise by 4.8 per cent, from 2.9 per cent this year.

The price of Dubai crude oil is assumed to stay unchanged at US$100 per barrel. Inflation is also expected to rise slightly from 2.2 per cent this year to 2.4 per cent.

Growth forecasts slip

Institute 2013 2014

ASP Research 2.9 4.3

Barclays 3.0 4.3

Credit Suisse 3.3 na

DBS 3.2 4.5

HSBC 2.8 4.4

IMF 3.1 5.2

JPMorgan Chase 2.6 3.0

Kasikorn Research 3.7 4.5

Institute 2013 2014

Siam Commercial Bank 3.4 4.5

Standard Chartered 4.0 5.5

Tisco Securities 3.5 4.6

UBS 2.8 4.5

Bank of Thailand 3.7 4.8

Fiscal Policy Office 3.7 na

NESDB 3.0 4.5 na

Median 3.5 4.5 NA

Source: Bloomberg, ASP

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