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UTCC cuts 2013-14 growth forecast

Thanavath Phonvichai

Thanavath Phonvichai

Thailand's gross domestic product could grow by as little as 4-4.5 per cent next year, lower than the previous forecast of 5.1 per cent, with the country's political problems hitting consumption, investment and tourism, the University of the Thai Chamber of Commerce said yesterday.

The UTCC's Economic and Business Forecasting Centre also expects the economy will expand by only 3-4 per cent next year, again mainly as a result of the ongoing political tension. Its previous forecast for the year was 3.5 per cent.

"The political factor is the key negative factor causing a slowing down of economic growth for the country this year and next. If there is no serious turmoil from the political conflict, the economy should show signs of recovery in the second quarter next year," said Thanavath Phonvichai, director of the centre.

The UTCC study estimates that the economy will lose between Bt30 billion and Bt70 billion from the political turbulence this year, while a loss of Bt70 billion to Bt100 billion could be experienced next year.

Domestic consumption is the sector that has been hardest hit, as consumers have low confidence about spending money amidst the uncertain political situation, he said.

Other negative factors damaging economic growth this year and next include falling crop prices, slower expansion of the industrial sector, fewer tourists, declining investment and a slowdown in export growth.

Thanavath added that economic growth could be significantly damaged if the political situation heated up further next year.

Under the centre's moderate-case scenario, GDP next year is expected to grow by only 3-4 per cent, but if violence were to break out, the economy could expand by less than 3 per cent.

He said the general election, which is scheduled for February 2, could help stimulate growth in the first quarter as an estimated Bt30 billion to Bt50 billion would be injected into the economy.

However, if the Democrat Party refused to take part the polls, the additional spending could drop to between Bt12 billion and Bt20 billion.

Based on predicted economic growth of 4.5 per cent next year, Thai shipments would grow by 6.5 per cent, higher than this year's forecast of 0.5-per-cent expansion following a better outlook for global economic growth and a recovery in the United States.

Suwisuth Siriwattanakul, assistant director of the centre, said Thailand would continue to face a huge trade deficit, estimated at Bt21.8 billion, this year due to the rising value of imports.

The government should carefully balance imports and exports and strive not to have an even higher trade deficit in the future, he said, adding that the UTCC believed the deficit should not be more than 7 per cent of GDP.

Next year, consumption is expected to grow 3 per cent, compared with this year's 1.9-per-cent expansion, while investment is expected to increase 6.9 per cent from 3.7 per cent in 2013.

The farming sector is predicted to grow 2.4 per cent next year from 0.7 per cent this year, while the industrial sector will expand by 5.9 per cent, against 0.9 per cent this year.

The number of foreign tourist arrivals is expected to reach 27.5 million in 2014, some 4.5 per cent higher than the estimated 26.3 million visitors this year.

Tourism income is forecast to rise 11.7 per cent year on year.

Meanwhile, Thailand is expected to see economic growth of 3 per cent this year and expansion of 4-5 per cent next year, according to the National Economic and Social Development Board.

After yesterday's Cabinet meeting, Deputy Government Spokesperson Sunisa Lertpakkawat said that based on the NESDB's report, 2013 growth was estimated at 3 per cent with headline inflation at 2.4 per cent and a current-account deficit of 0.9 per cent of GDP.

Next year's economic growth is projected at between 4 per cent and 5 per cent, with headline inflation at 2.1-3.1 per cent and a current-account deficit of 0.6 per cent.

October's key economic figures, particularly the private consumption index, exports and agricultural production, improved from the previous month, reflecting a gradual economic recovery, she said.

The private consumption index dropped 0.03 per cent, compared to the third quarter's 2.1-per-cent decrease. However, the consumer confidence index fell for the seventh consecutive month to 66.6 from its record high of 75.0 in March.

The private investment index declined by 4.9 per cent, compared to the previous month's 3.6-per-cent drop, when there was a high base in the same month of last year.

Sunisa said inflation was 1.5 per cent in October, up from the previous month's 1.4 per cent, while the unemployment rate remained low and the current account was in surplus.

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