Thailand Revises Economic Forecast Downward

[george]

ECONOMY

BOT revises economic forecast downward

BANGKOK: -- Bank of Thailand has revised downward Thailand's economic forecast from minus 1.5 to minus 3.5 to minus 3 to minus 4.5 per cent, due mainly to political instability which could affect budget disbursement, the flu pandemic, global economic crisis and renewed spike in oil prices.

Core inflation was also revised down to minus 0.5 per cent, from 0-1 per cent, while headline inflation would contract 1.5 per cent to 0 per cent, from minus 1 per cent to 1 per cent.

Atchana Waiquamdee, deputy governor, said the revision was based on the 7.1 per cent economic contraction in the first quarter, as well as the sharper-than-expected contraction in other indicators.

This year's exports are expected to contract 19.5-22.5 per cent.

-- The Nation 2009-07-24

[LaoPo]

Thailand’s Central Bank Cuts GDP, Inflation Forecasts

By Suttinee Yuvejwattana

July 24 (Bloomberg) -- Thailand’s central bank lowered its gross domestic product and inflation forecasts for 2009, a sign there is room to reduce the key interest rate further if an anticipated economic recovery falters.

The economy may shrink as much as 4.5 percent this year, more than an earlier forecast for a contraction of up to 3.5 percent, Deputy Governor Atchana Waiquamdee said in Bangkok today. Consumer prices may fall as much as 1.5 percent, she said, compared with an April prediction of as much as 1 percent.

Southeast Asia’s second-largest economy is mired in its deepest recession since the Asian financial crisis, with exports falling for eight months amid a simmering political crisis that forced a change in government in December. The country is trailing South Korea and China in emerging from the global slump even as interest rates were cut to a five-year low.

“The central bank can’t be complacent,” said Isara Ordeedolchest, an economist at KTB Securities Ltd. in Bangkok. “They may want to keep room for further rate cuts and use it when the situation deteriorates markedly.”

The Bank of Thailand has left the benchmark interest rate unchanged at 1.25 percent after 2.5 percentage points of cuts from December to April. Central bankers must retain expansionary monetary policies even as the risks to an economic recovery dissipate, the Asian Development Bank said yesterday.

Atchana said the central bank lowered the 2009 economic forecast mainly due to “worse than expected” first-quarter data. Thailand will release GDP figures for the three months to June on Aug. 24.

Global Slowdown

The baht held at 33.97 against the dollar as of 3:37 p.m. in Bangkok. The benchmark stock index pared gains, rising 0.7 percent after climbing as much as 1 percent earlier.

Thailand slid into a recession in the first quarter when the economy contracted 7.1 percent from a year earlier, as the global slowdown hurt exports by Delta Electronics (Thailand) Pcl and other companies. Prime Minister Abhisit Vejjajiva has since said the country is past the worst of the slump.

South Korea’s economy expanded 2.3 percent last quarter from the previous three months, the fastest pace in almost six years, as exports and household spending jumped, the central bank said today. China, the world’s third-largest economy, grew 7.9 percent in the second quarter from a year earlier, accelerating from the previous three months.

Exports Tumble

Japan’s exports fell in June at the slowest pace this year and orders for Taiwanese shipments declined the least in eight months, adding to evidence that Asia’s economies are on the road to recovery.

Thailand’s exports may tumble as much as 22.5 percent in 2009, less than an April forecast for a decline of as much as 27.5 percent, the central bank said. Exports fell every month from November to June, with the decline easing last month.

“It looks like the economy has bottomed out,” Atchana told reporters. “The contraction in many indicators has stabilized. We see improving momentum in the second quarter and it should continue.”

Consumer prices fell 4 percent in June and have dropped every month this year as oil costs eased from last year’s record levels. Thailand imports almost all of the oil it uses.

“It’s not deflation,” Atchana said. When the government’s measures to subsidize bus fares and utility costs for low-income earners expire, “we will see inflation accelerate.”

Thailand has had five prime ministers and a coup in the past three years as competing groups have battled for power. Demonstrators loyal to former leader Thaksin Shinawatra burned tires, blocked roads and attacked Abhisit’s vehicle in April. Puea Thai, a political party backed by Thaksin, won a June by- election in the rural Northeast, signaling his support base remains strong.

http://www.bloomberg.com/apps/news?pid=new...d=a6GlhsaoqkME#

LaoPo

[george]

Central bank decreases economic growth projection

BANGKOK: -- The Bank of Thailand (BoT) has revised its economic growth estimate for this year downward to 3-4.5 per cent from the 1.5-3 per cent forecast earlier, citing the presence of many critical risk factors which the economy now faces.

BoT Deputy Governor Atchana Waiquamdee said the factors include the slower-than-expected global economic growth, possible failure by the government to disburse its budget to stimulate the economy, political uncertainties, the ongoing A(H1N1) influenza pandemic that affects tourism and private-sector consumption, and rising oil prices.

These factors could undermine both corporate earnings and the purchasing power of consumers.

“The economy looked more stable in the first two months of the second quarter and we believed it had already bottomed out. Still, the negative growth of the gross domestic product at 7.1 per cent in the first quarter is worse than expected,” Atchana said.

However, she revealed that the central bank had increased the GDP projection for next year to 3-5 per cent from 1.5-3 per cent expected earlier since it is projected the global economy will recover and grow 3.4 per cent next year.

Atchana said the Thai economy is likely to enjoy positive growth in the fourth quarter this year because exports will tend to decline at a slower pace, the second phase economic stimulus scheme will benefit the economy and the government speeds up its budget disbursements.

Private-sector consumption is expected to drop further by 1-3 per cent and private investment to shrink by 17-19 per cent.

Exports are forecast to contract 19.5-22.5 per cent and imports to shrink 29-32 per cent, resulting in a trade surplus of US$15-18 billion and a current balance surplus of the same amount.

She affirmed the central bank had closely monitored the baht movement all along.

Atchana shrugged off criticism that exports had dropped sharply because of the stronger baht, saying the plunge was not mainly due to the baht’s rise.

Whether exports would grow favourably depends on the global economic situation and the economic expansion of Thailand’s trade partners.

-- TNA 2009-07-25

[teddy_bare]

I wonder how long it will take the 'lower the baht rate' gang to comment.

Suck it up, as the rest of us have to do!