Cites gains from "global super cycles"
Standard Chartered Bank is bucking the trend by holding onto its 3.5-per-cent economic growth forecast for Thailand this year, citing its rosy projections for economies around the world that are resuming their paths on the “global super cycle” years of growth.
David Mann, StanChart’s head of research for Asia, said yesterday that 2014 could be a “milestone year” for Asia, as the region is set to benefit from the resumption of growth in Europe and accelerated growth in the US. It forecasts Asia excluding Japan to grow by 6.5 per cent this and next year.
Unlike during the past four to five years when Asian economies were driven by liquidity injected through quantitative easing policies of central banks and the beneficiaries were portfolio investments, this time Asia will grow from the real economy, particularly the export sector, he said.
Usara Wilaipich, senior economist at Standard Chartered Bank (Thai), said the bank has maintained its more optimistic forecast for gross domestic product growth this year because of three factors – the global economic recovery, the baht’s depreciation and signs of recovery in the export sector.
During the previous four major violent political episodes that Thailand has faced during the past decades, the economy withstood the domestic uncertainty and recorded significant growth rates, thanks largely to positive external factors.
The bank forecasts the economy to recover significantly in the second half of this year – expanding by 2.8 per cent in the third quarter and 3.6 per cent in the fourth quarter, compared to contracting 1.4 per cent in the first quarter and 1.7 per cent in the second quarter.
StanChart’s forecast for the whole year is higher than most other institutions – government and private – which have slashed their GDP projections to below 3 per cent.
Only in February, StanChart slashed its forecast from 4.7 per cent to 3.5 per cent, citing the prolonged political uncertainty.
At the global research briefing held in Bangkok, Usara said the economy will receive a “double whammy” from the currency’s deprecation as the baht has dropped by more than 12 per cent from its peak at Bt28.5 per US dollar last April to about Bt32 now.
The bank’s projection that exports can rev up by as much as 9 per cent this year is a key factor for its better GDP forecast for the economy.
In the coming months, the baht may soften slightly but is expected to go back to Bt32 during the fourth quarter. The bank suggests the Bank of Thailand to keep its policy interest rate at the current 2-per-cent level.
Mann said StanChart forecasts the world economy to pick up by 3.4 per cent this year, a remarkably rebound from last year’s 2.7 per cent. And it believes this rate is achievable until 2020, due to the “global super cycle”.
StanChart expects the US economy to grow by 2.4 per cent this year, the European Union by 1.3 per cent, China 7.4 per cent and Asia ex-Japan 6.5 per cent.
Mann said India, Indonesia or the Philippines could beat China in the GDP growth race, though China would remain in the 7-per-cent range for the next few years.
At yesterday’s global briefing, StanChart economists forecast a “divergence” in emerging market currencies, flat oil prices, continued soft prospects for coal, falling gold prices and a rising trend of some agricultural commodities due to cold weather and conflicts in Ukraine, for this year.