Morgan Stanley cuts forecast on poor outlook
Poorer-than-expected growth data in the first half as well as poor outlook drove Morgan Stanley to revise downward the growth projection for Thailand and other three Asean nations.
Its economics team revised downward the 2013 growth projection for Thailand from 4.7 per cent to 3.7 per cent.
It also cut the projections for other three Asean nations - Indonesia, Malaysia and Singpapore. The average growth of the four nations is now projected at 4.5 per cent, from 4.8 per cent. Morgan Stanleyā€™s global forecast is also slashed from 3.1 per cent to 2.9 per cent.
Looking ahead, these countries would be affected by the US tapering of the quantitative easing and the economic slowdown in China. Yet, Morgan Stanley also sees the possibility that their export would be lifted by a recovery in developed economies.
Regarding Thailand, the effective interest rate may rise. With weak current account, Thailand could face tight liquidity if the US tightens the monetary policy. This would bar the government from running a high budget deficit, to finance stimulus measures.