The National Economic and Social Development Board (NESDB) has trimmed its economic growth projection for 2012 to 5.5-6 per cent from 5.5-6.5 per cent, mainly on slow recovery in the manufacturing sector and weak export demand.
The Bank of Thailand earlier revised downward the projection on a poor export outlook following fragile recovery in the US economy, economic slowdown in China and chronic turmoil in the Euro area. The central bank expected Thailand’s gross domestic product to expand 5.7 per cent this year and 5 per cent next year from 6 per cent and 5.8 per cent, respectively.
At the press conference today, Akhom Termpittayapaisit, secretary general of the NESDB, said that intensifying euro crisis and slow recovery in the manufacturing sector are the two main reasons that the economy should expand at only 5.75 per cent, against the May forecast of 6 per cent.
It turned out that the manufacturing sector could not resume normal capacity in the first half as expected.
The NESDB cuts its export growth forecast by half from 15.1 per cent to 7.3 per cent.
Its data showed that the Thai economy in the second quarter expanded 4.2 per cent from the same period last year, thanks to post-flood reconstruction. Dragging the economy were low export demand and falling agricultural prices.
NESDB expects inflation this year to be in the range of 2.9-3.4 per cent, against 3.8 per cent last year Against expectation that Thailand would run a current account deficit this year, it forecasts surplus of 0.1 per cent of gross domestic product compared to 3.4 per cent surplus in 2011.
Akhom noted that slow recovery in the global economy would post a great external risk to the Thai economy. To ensure that domestic consumption could support the growth in the second half, the government should focus its attention on four areas.
First, speed up recovery to the floodhit manufacturing sector, to ensure that businesses resume normal operations as quickly as possible.
Second, rush budget disbursement and government projects, particularly water management ones, to replenish export slowdown and raise the private sector’s confidence.
Third, the interest rate and foreign exchange policy should be relaxed to boost domestic consumption and export, at the time when exporters need price competitiveness to cope with weak global demand.
Fourth, come up with measures to assist SMEs affected by the higher wage, particularly those in the labourintensive industries. Measures are necessary to reduce their costs and lift their production efficiency. There should also be measures to assist workers who may suffer from layoffs or fewer work hours.