The World Bank has cut Thai economic projection this year to 2.7%, weighed by export contraction.
The bank downgraded Thailand’s 2019 Gross Domestic Product (GDP) growth outlook to 2.7% from the 3.5%. The lowest among ASEAN’s developing country in its latest report on the “East Asia and Pacific Economic Update.”
The Washington-based institution also cut Thailand’s GDP for 2020 to 2.9% from 3.6%.
Export slump in the first half of the year, global economic slowdown and impacts from the trade tension between China and the US contributed to lowering of the GDP growth outlook, the world bank report said.
Thailand’s drought, worst in 10 years affected farmers’ income, weakening domestic consumption.
The government’s economic stimulus measures were rolled out just in time when the domestic economy has weakened and exports contracted 5.3%, a larger-than-expected decline, said Kiatipong Ariyapruchya, the senior country economist of the World Bank for Thailand.
He suggested that the government can issue more stimulus measures. Focusing on low income earners because Thailand’s public debt remains low.
Thailand’s Central Bank has Limited Scope
The Bank of Thailand has limited scope to tackle baht strength but the currency’s climb is a sign of investor confidence in the country’s economic fundamentals, according to the World Bank.
“The trends that drive Thai baht appreciation aren’t easy to combat by central bank policies,” Birgit Hansl, the World Bank’s country manager for Thailand, said in an interview on Monday in Bangkok. The jump is part of a global picture. Which nations with small, open economies have “limited ability” to change, she said.
The baht has emerged as a haven for some investors, with a current-account surplus and $220 billion of foreign reserves. The currency’s climb against the dollar this year, the best in Asia. Contributed to a slowdown in the trade-led Thai economy by hurting export competitiveness.
The resilience of the baht is a “double-edged sword” but a high level of economic stability is more important for long-term investors, Hansl said.
“In that regard the Thai baht is a good sign,” she said. “Investors are seeing Thailand as stable and safe place.”