Central bank foresees several downside risks

business December 25, 2015 17:28

By The Nation

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While slightly raising the 2015 economic growth forecast, the Bank of Thailand lowered the 2016 forecast from 3 per cent to 2.7 per cent.



In the report capturing the Monetary Policy Committee's meeting on December 16, several downside risks for the economy in 2016 were mentioned. 
These include (1) a sharper growth slowdown in the Chinese and Asian economies, (2) a higher-than-expected adverse impact of geopolitical conflicts on the outlook of global demand recovery and tourist confidence and (3) a more-severe-than-expected drought in 2016 and its impact on agricultural and industrial productions. 
Meanwhile, there are few factors that may improve the situation including (1) faster-than-expected disbursement of public spending especially investment expenditure and (2) greater-than-expected effects of fiscal stimulus measures on private sector spending. 
As 2015 is ending the central bank raised the growth forecast for the year from 2.7 per cent to 2.8 per cent. Earlier this year, it penned the forecast at 3 per cent. 
Headline inflation is expected to increase by only 0.8 per cent next year, from previous forecast of 1.2 per cent as commodities prices are expected to remain low. However, core inflation, excluding volatile energy and food prices, is expected to rise by 0.9 per cent from the previous forecast of 0.8 per cent.