FPO slashes growth to 2.6% from 4%

The Fiscal Policy Office has slashed its 2014 economic growth projection to 2.6% from 4% provided that a new government is formed by the third quarter.

The protracted political struggle from late last year has affected the confidence of consumers, investors and foreign tourists, director general Somchai Sujjapongse said on Thursday.

Disbursements on government investment plans have also lagged behind, especially in the 2-trillion-baht infrastructure projects and 350-billion-baht water management plans, Mr Somchai said.

Exports, which have recovered in keeping with the better economies of the country's trade partners, especially the United States and Europe, will take the front seat to spearhead growth this year, he said.

Sharing the Commerce Ministry's view, the FPO projected exports would increase by 5%. They will accelerate in the latter half once the political turmoil eases.

The FPO remains confident the overall economy is still robust. Among the key risks are the US Federal Reserve's monetary policy, which dictates fund flows, the sluggish Chinese economy and labour shortages at home in some industries, he said.

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