News Column

FPO lowers forecast to 2% growth

July 31, 2014

By Wichit Chantanusornsiri, Bangkok Post, Thailand

July 31--The Fiscal Policy Office (FPO) has lowered this year's economic growth forecast to 2% from 2.6% and is estimating a 0.3% year-on-year contraction in second quarter GDP.

However, the country's economic growth for the April-June period is likely to have expanded by a seasonally adjusted 0.2% quarter-on-quarter, finance permanent secretary Rungson Sriworasat said, adding that if true, that would mean a first half contraction of only 0.4%.

The quarter-on-quarter growth could help Thailand to avoid slipping into technical recession after the country's first-quarter GDP shrank 2.1% quarter-on-quarter and 0.6% year-on-year.

However, the FPO's revised forecast is higher than the Bank of Thailand's current projection of 1.5% for 2014.

Mr Rungson said the FPO's latest estimate was also based on an assumption that second-half growth would come in at 4.3% year-on-year, driven by higher consumer and investor confidence and acceleration of the fiscal-2014 and fiscal-2015 budget disbursements without any delays.

FPO director-general Kritsada Jinavijarana said his department had trimmed its private consumption growth forecast to a mere 0.3% this year from 2.3% predicted in March.

The downward revision is due to serious effects from political tensions in the first five months of this year, but the higher growth estimate of public consumption will help to offset private consumption, he said.

The FPO has raised this year's forecast for public consumption to 4.6% from 1.9%.

The projection for private investment growth was lowered to a 3.5% contraction for 2014 from a 1.9% expansion predicted in March.

However, the Finance Ministry's think tank has upgraded this year's public investment forecast to 4% from a contraction of 3.1% projected earlier.

The FPO has also slashed its 2014 export growth estimate to 1.5% from 5%.

The Commerce Ministry estimates exports will grow by 3.5% in 2014 after rebounding to expand 3.9% year-on-year in June.

The department has also cut import growth to a 5.2% contraction this year from a 3.7% expansion expected previously.

Kulaya Tantitemit, executive director of the FPO's Macroeconomic Policy Bureau, said the latest forecast of 3.83% economic growth for 14 of the country's trading partners was virtually the same as the March projection.

The FPO now also estimates 26.7 million tourists will visit Thailand this year, 1 million fewer than expected.

The number of tourist arrivals shrank by 9.9% in the first half.


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Source: Bangkok Post (Thailand)

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