Sagging exports sap growth
A PROJECTED slump in export growth has prompted the Bank of Thailand (BOT) to cut its forecast for the country’s economic expansion this year to 3.8 per cent, from an earlier estimate of 4 per cent.
The central bank now expects exports to grow just 3 per cent from last year, compared with a prediction of 3.8 per cent from the BOT’s Monetary Policy Committee (MPC) in December.
It cited for the revisions the global economic slowdown, the stage in the business cycle for electronics products and the trade dispute between the US and China. The central bank cut its estimate for import growth to 3.1 per cent, from 3.8 per cent.
The projected estimate for economic growth next year was left unchanged at 3.9 per cent.
The MPC, meeting yesterday, also left the policy rate unchanged, at 1.75 per cent.
The committee cited the need for appropriate monetary policy settings to facilitate economic expansion amid the uncertainties in the global economy and pressure from local factors.
According to the MPC, although the economic forecast has been revised down, the Thai economy is expected to continue expanding close to its potential, supported by domestic demand.
It pointed to a trend of increased private investment, encouraged by the relocation of manufacturing plants to Thailand and public-private partnerships for infrastructure projects.
These factors had contributed to confidence in the investment outlook, the MPC said.
Although private investment was projected to climb 4.4 per cent, marked down the 4.5 per cent forecast at the MPC’s December meeting, private consumption was anticipated to increase 3.9 per cent this year. An earlier estimate was for 4 per cent growth.
“Private consumption has tended to expand continuously following improvements in farm and non-farm household income and more income redistribution, due partly to the government’s stimulus measures. However, pressure from high household debt remains,” the MPC noted.
For growth in public investment this year, the MPC has lowered its estimate for this year to 6.1 per cent, compared with an earlier prediction of 6.6 per cent.
Public spending for both investment and consumption is forecast to slow down in 2019, due partly to delays in investments by some state enterprises.
Public consumption is expected to rise 2.3 per cent this year, compared with a prior prediction of 2.6 per cent.
This year’s estimated headline inflation rate remains unchanged, but the predicted core inflation was cut to 0.8 per cent from 0.9 per cent.