Thailand is bracing for slower economic growth, in line with many other countries in Asean and around the world.
The International Monetary Fund has already axed its global growth forecast for this year, and the Bank of Thailand is expected to be the latest to follow suit.
The central bank’s Monetary Policy Committee yesterday resolved to revise its 2013 growth forecast for the Kingdom, and the figure will be released on July 19, said panel secretary Paiboon Kittisrikangwan.
The revision is in line with other agencies’ moves, he said.
The Bank of Thailand conceded that the global economy had expanded less than its previous assessment, due to China’s economic slowdown, which weighs on Asian exports, and despite some improvement in the US economy from better housing and labour market conditions.
Financial stability is another area |to be closely monitored, given the increase in Thai household debt, Paiboon added.
The central bank is expected to cut the 2013 growth forecast from the current target of 5.1 per cent.
As all houses’ projections are now below 5 per cent, Prime Minister Yingluck Shinawatra has called for a workshop with economic ministers to formulate ideas on stimulus measures.
However, Bangkok Bank executive chairman Kosit Panpiemras said the economy could expand well at a growth rate of 4 per cent.
“We stimulated the economy in a big way.
“If we are repeating that, for little effect, there’s no use. Before that, we said the stimulus measures would boost the economy in a big way, but now we’re expanding at only 4 per cent. If they are resorting to the old medicine, we need to rethink and improve it,” he insisted.
The central bank has been under pressure to cut the policy interest rate in order to boost the economy, but – after the 25-basis-points cut at the previous meeting – it decided yesterday to maintain the rate at 2.5 per cent.
“Regarding the question of whether it is necessary for the rate to be cut to stimulate the economy, we saw some signs of slowing down in the previous meeting.
“That was the reason why we cut the rate at the time. At 2.5 per cent, the rate is accommodative enough for economic expansion,” Paiboon said.
Pointing out that the key interest rate would move in line with prevailing economic conditions, he said that if global conditions changed and domestic consumption and investment slowed more than expected, this could lead to a cut.
Thailand is not the only country to be suffering as a result of global uncertainties, which have been affecting many economies.
In its revised “World Economic Outlook”, the IMF cited China’s economic slowdown and the tapering of the US Federal Reserve’s bond purchases as the main reasons for lowering its April global-growth projection for 2013 by 0.2 percentage point to 3.1 per cent.
“The forecasts assume that the recent rise in financial-market volatility and the associated yield increases will partly reverse, as they largely reflect a one-off repricing of risk due to the changing growth outlook for emerging-market economies and temporary uncertainty about the exit from monetary-policy stimulus in the United States.
“However, if underlying vulnerabilities lead to additional portfolio shifts, further yield increases and continued higher volatility, the result could be sustained capital-flow reversals and lower growth in emerging economies,” the IMF said.
Global growth will recover in 2014, said the IMF, but at 3.8 per cent, which is 0.2 percentage point lower than its previous estimate.
At 5 per cent this year and about 5.5 per cent in 2014, growth in emerging-market and developing economies is now expected to evolve at a more moderate pace, some 0.2 percentage points slower than in the April “World Economic Outlook”.
This embodies weaker prospects across all regions, the IMF said. In China, growth will average 7.75 per cent in 2013-14, 0.2 and 0.5 percentage points lower, respectively, than the April forecast.
Forecasts for the other BRIC economies – Brazil, Russia and India – have been revised down as well, by 0.2 to 0.75 percentage points.
The outlook for many commodity exporters, including those among the BRICs, has also deteriorated due to lower commodity prices.
Growth in sub-Saharan Africa will be weaker, as some of its largest economies, notably Nigeria and South Africa, struggle with domestic problems and weaker external demand.
Growth in some economies in the Middle East and North Africa remains weak because of difficult political and economic transitions, said the IMF.