Central bank slashes growth to 2.7%

The Bank of Thailand has revised down its gross domestic product (GDP) growth projection this year to 2.7% due to greater downside risks to economic growth.

However, it remains optimistic exports can help sustain growth in the current downturn.

Paiboon Kittisrikangwan, an assistant governor and secretary of the Monetary Policy Committee, said protracted political uncertainties at home and Asean's lower-than-expected economic growth are the main downside risks to this year’s growth.

Domestic consumption will likely slow in the first half now that economic stimulus measures ended. People have also been reluctant to spend in light of swelling household debt and shrinking consumer confidence, he said.

The protracted political stalemate could erode the private sector's confidence and affect tourism growth.

Earlier, central bank governor Prasarn Trairatvorakul and the National Economic and Social Development Board’s secretary general Arkom Termpitayapaisit said this year’s GDP growth may come below 3%, whereas the Thai Chamber of Commerce chairman Isara Vongkusolkit said economic growth could be flat or contract to 2% if serious clashes occur.

Last October, the central bank’s official 2014 economic growth forecast was expected at 4.8%.

The economy grew 2.9% last year on the back of tepid domestic consumption mired by political concerns in the final quarter, as well as dwindling public and private investments, while annual export growth contracted by 0.2%.

Meanwhile, the central bank expects the economy to grow at 4.8% in 2015 as government spending will resume and private spending and tourism are expected to return along with a further pickup in exports.

Domestic consumption may grow at 0.3% this year, said Mr Paiboon, adding that consumption should rebound if the political situation eases in the first half.

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