Paiboon Kittisrikangwan, an assistant governor and secretary of the Monetary Policy Committee, yesterday said declining domestic consumption, which lasted longer than expected as consumer confidence softened and debt rose, delays in the government's budgetary disbursement and extra-budgetary infrastructure projects, and a slow export recovery all contributed to the downgrade.
The central bank's latest 2013 economic growth forecast is the same as the Fiscal Policy Office's estimate at 3.7%, while the National Economic and Social Development Board recently projected a range of 3.8% to 4.3% this year.
The Bank of Thailand also cut next year's growth forecast to 4.8% from 5%.
"Thai economic growth in 2014 is expected to improve due to a pickup in exports, causing private investment to expand, coupled with increasing consumption of durable goods and public spending on infrastructure projects," said Mr Paiboon.
The central bank trimmed its 2014 export growth estimate to 7%, down from 8% earlier.
"Continued fiscal stimulus, accommodative monetary policy and the recovery of the global economy will lead to a stronger export performance and encourage more corporate investment for capacity expansion and efficiency enhancement," said Mr Paiboon.
The bank also forecast the 2013 current account will run a deficit of US$6.8 billion or 1.8% of the country's gross domestic product (GDP) compared with the previous projection of a surplus of $1.7 billion.
This was attributable partly to gold imports, said Mr Paiboon, adding that the current account is projected to run a surplus of 1.2% of GDP if gold imports are removed.
Profit repatriation by Japanese automobile makers following solid earnings prompted by the government's tax rebate scheme for first-time car buyers also contributed to the current account deficit forecast.
Mr Paiboon said delays in budgetary disbursement of infrastructure development projects, an uncertain economic recovery in the G3 (the US, EU and Japan), and the US debt ceiling negotiation and tapering of the US Federal Reserve's monetary stimulus programme are key risks for the Thai economy.
Investments in infrastructure projects are expected to begin in next year's first quarter, but there is a chance they will be delayed even further, he said, adding that the investment sum is projected at half the government's planned investment for infrastructure projects in the next fiscal year.
It is difficult to predict how the government's investment will contribute to GDP growth next year, said Mr Paiboon.
The central bank expects an investment sum of 80 billion baht for infrastructure development and 48 billion for water management projects next year.
Government spending is less than expected, particularly in the central budget and investment budget, as the average rate of public expenditures from 2008-12 was estimated at 93% but has dropped to 90.5% in fiscal 2013.
Inflation forecasts this year were also cut, with core inflation estimated at 1% from 1.1%, while headline inflation is 2.2%, down from 2.3%.
The 2014 core and headline inflation targets are projected at 1.2% and 2.4%, respectively, down from earlier projections of 1.4% and 2.6%.
Mr Paiboon said inflationary pressure is slightly lower than previously assessed due to softening demand and modest cost pressures.
But cost pressure is expected to rise slightly in the period ahead on a gradual increase in domestic prices of liquefied petroleum gas for household and transport use.