BANGKOK – Thailand’s central bank cut its economic growth forecast for this year for the third time this year as the economy continues to struggle more than a year after an army coup ended political unrest but says it hopes government measures will lend support.
The Bank of Thailand downgraded its growth estimate this year to 2.7 per cent from 3 per cent forecast three months ago, about half the rate it expected a year ago.
It also cut its economic growth forecast for next year to 3.7 per cent after raising it to 4.1 per cent in June.
The bank now expects exports, a key economic driver, to tumble 5 per cent this year, which will push the country’s exports into negative terrain for the third year running.
“The main reason for the downgrades is still external factors, especially exports. The economy will recover gradually but downside risks remain fairly high,” the bank’s assistant governor, Mathee Supapongse, told a news conference.
The Bank of Thailand cut its export growth forecast for next year to 1.2 per cent from 2.5 per cent as seen in June.
Charnon Boonnuch, economist of Tisco Securities, said the big cut in the bank’s export projection was “surprising” as trade should improve in the fourth quarter. The previous forecast was for a fall of 1.5 per cent.
Although the coup restored some stability, the junta has been unable to put Southeast Asia’s second-largest economy back on a recovery track as exports and consumption remain stubbornly weak. Growth last year was 0.9 per cent.
In its efforts to lift growth, the junta this month unveiled economic measures to help small firms and rural areas.
But Mathee said the stimulus would largely benefit the economy next year and may add just 0.1 percentage point to growth this year.
The central bank, which announces economic forecasts every three months, said it expected faster growth in the second half.
On quarter, the economy grew 0.4 per cent in the second quarter and 0.3 per cent in the first quarter.
Last week, the bank left the benchmark rate steady at 1.50 per cent after two surprise cuts this year, letting a weak baht and stimulus measures help growth. – Reuters