Siam Commercial Bank Economic Intelligence Centre (SCB EIC) forecasts Thailand's gross domestic product next year to show a slower growth rate at 3.5-4.5 per cent because of the end of the short-term economic stimulus.
Dr Sethaput Suthiwartnarueput, executive vice president and chief economist of the bank, said yesterday that the centre saw slowing growth in the Thai economy in line with a slowing global economy, as the recent global growth had been driven by such one-off factors as stimulus and inventory.
Thailand's GDP this year is expected to grow 7 per cent.
The expected slowing of global growth will affect Thai exports. The country is expected to see exports next year grow by 12 per cent, down from 25-per-cent growth this year.
SCB EIC sees little chance that the economy will grow more than 4.5 per cent next year unless the manufacturing sector grows more than 11 per cent.
"The manufacturing sector this year is nearing 11 per cent but this high growth comes from lower growth in 2009. I don't think the Thai economy will grow more than 4.5 per cent next year," Sethaput said.
He added that entrepreneurs should not use the GDP is the only indicator, noting that some sectors such as banking relied on other factors.
He said private demand would not be able to absorb the expected decline of exports because there were many pressures, especially the stronger baht. Moreover, rising interest rates next year and higher oil prices would pull down export growth.
Chatri Sotangkur, executive vice president of SCB's treasury division, said the economies in the United States and Europe were continuing to face volatility, while Thailand like other countries in Asia was looking forward to positive growth, rising interest rates, and trade surpluses that would lead to a stronger baht. However, the policy rate was expected to adjust slowly to deal with inflation.
Sethaput said the SCB EIC predicted that the policy rate would rise by 3 per cent because the Bank of Thailand sees the rate is still lower than inflation, now 3.1 per cent.
It expects the baht next year will be stronger at 30 per US dollar, noting that the capital inflow in the region, including Thailand, is still a factor strengthening the currency.
Sethaput said that to defend the strengthening baht and the rate hike, state agencies should encourage entrepreneurs to invest more in overseas markets.