2013 Growth Forecast Revised Downward, Export Growth Grim

[Lite Beer]

2013 growth forecast revised downward, export growth grim
By English News

BANGKOK, May 20 – Thailand’s gross domestic product (GDP) forecast is lowered from 4.5-5.5 per cent to 4.2-5.2 per cent due to the disappointing Q1 economic growth of 5.3 per cent, below the previously forecast 6-7 per cent, a senior official said today.

Arkhom Termpittayapaisith, secretary general of the Office of the Economic and Social Development Board (NESDB), said Thailand's Q1 economic expansion at 5.3 per cent this year is far below last year’s Q4 growth of 19.1 per cent.

Household spending increased by 4.2 per cent, a sharp drop from last year’s Q4 at 12.4 per cent while last year’s Q4 investment at 22.9 per cent dropped to only 6 per cent in Q1.

The Q1 export volume in dollars increased 4.5 per cent, almost half below the government’s 9 per cent target while the NESDB earlier forecast an 11 per cent growth, he said.

The export volume in baht increased by only 0.5 per cent given the surging Thai currency which has resulted in a Bt181 billion loss, he said, predicting Thailand’s export value to grow at only 7.6 per cent this year, much below the original 11 per cent forecast.

He called on the Bank of Thailand (BoT) to give more emphasis on stabilising the baht than concentrating on inflation.

Q1 inflation remained at 3.1 per cent and it should be around 2.3-3.3 per cent this year.

Mr Arkhom said the 'currency war' and unusual inflows of foreign capital are immediate problems that should be urgently addressed by the central bank, referring to the foreign capital inflow of US$4.5 billion in the past three quarters.

The capital inflow in Q1 was US$4.775 billion, higher than the annual average value at US$2.2 billion.

He said a reduced policy interest rate would be the best solution to deter foreign capital inflows and that the BoT should enforce appropriate measures to create awareness among foreign investors that Thailand is not a haven for baht speculation.

A predicted global economic expansion of only 3.6 per cent and the continued appreciation of the baht are volatile factors for Thailand’s exports, he said. (MCOT online news)

-- TNA 2013-05-20

[webfact]

Thai economy contracts in first quarter

BANGKOK, May 20, 2013 (AFP) - Thailand's economy shrank 2.2 percent in the three months to March from the previous quarter -- the first contraction in more than a year -- as manufacturing output fell, official data showed Monday.

The decline followed a blistering year-long recovery from devastating floods in late 2011 that hit major factories north of the capital Bangkok and caused a double-digit drop in gross domestic product (GDP).

On a year-on-year basis, GDP expanded by 5.3 percent in the first quarter of 2013, the government's National Economic and Social Development Board (NESDB) reported.

That marked a sharp slowdown from the fourth quarter of 2012, when growth hit a record high of 19.1 percent, according to an updated estimate.

"The main drivers were domestic consumption and tourism," NESDB secretary general Arkhom Termpittayapaisith said of the most recent quarter.

Growth in those sectors helped to offset a 5.9 percent quarter-on-quarter slump in manufacturing, which had expanded rapidly last year, helped by a government scheme to encourage people to buy new cars.

"The expiry of a subsidy scheme for first-time car purchases appears to have hurt car sales in January and February," said Daniel Martin, Asia economist at the Capital Economics consultancy firm.

"However, the effect has been shortlived -- sales were back to a record high in March. Consumer confidence remains buoyant, while hikes in minimum wages at the start of this year should support spending," he added.

The NESDB reduced its forecasts for 2013 economic growth to 4.2-5.2 percent, from a previous projection of 4.5-5.5 percent, because of the weaker-than-expected first quarter performance.

Arkhom said growth would be affected by a weaker-than-anticipated economic recovery in the United States, Europe and Asia.

The Thai government has urged the central bank to reduce its key interest rate -- now at 2.75 percent -- to rein in a rising baht, which is bad news for exporters.

The Bank of Thailand last cut rates in October 2012 to help manufacturers.

Martin said the Bank was "unlikely to risk undermining its credibility" by taking action when it meets next week, predicting that the policy rate would be left at its current level for the rest of the year.

-- (c) Copyright AFP 2013-05-20

[webfact]

ECONOMY
NESDB revises down 2013 growth forecast
Wichit Chaitrong
The Nation



BANGKOK: -- The Office of National Economic and Social Development Board has revised down 2013 economic growth forecast to 4.2-5.2 per cent, due to the lower-than-expected growth in the first quarter.

Previously, it forecast 4.5-5.5 per cent growth rate for the year. The Bank of Thailand’s forecast is 5.1 per cent.





Baht appreciation is part of the problems, according to Arkhom Termpittayapaisith, secretary general of the NESDB. At the press conference on Monday, he suggested the Bank of Thailand’s Monetary Policy Committee to slash the policy rate as much as 1 per cent, in light of stabilised inflation against irregular capital inflows to the Kingdom.

He said that as the baht surges to 29 per US dollar from 31 in the same period last year, Thailand’s export value in baht term has been shaved off by around Bt180 billion.

The NESDB announced today that the Thai economy expanded 5.3 per cent year on year in the first quarter this year.

Compared with growth rate of 18.9 per cent in the fourth quarter last year, the GDP contracted 2.2 per cent, according to the think tank.

Arkhom attributed the growth to domestic demand and tourism growth. Exports were weighed down by weak global demand and the baht appreciation.


-- The Nation 2013-05-20

[Suffinator]

Well no real shock that exports are in the toilet when the Baht continues to rise. Must be hurting imports as well as most people I know are reducing the amount of money they bring in each month which means less spending power on the already outrageous prices of foreign goods.

[Robby nz]

Of course the export of rice or lack of same wouldn't have anything to do with it.

[Halion]

Hardly suprising and I would not doubt that it may end up at below 4.5 % however owing to the mentality of the current Government that fact would never come to light. There can be little doubt that the figures are and will continue to be "adjusted"

[SantiSuk]

"Slash by as much as one per cent" = poor command of the meaning of the word 'slash'.

"Expiry of a subsidy scheme for first-time car purchases hurt car sales in January and February" = poor command of the concept 'government'.

Edited May 20, 2013 by SantiSuk

[IsaanUSA]

Well no real shock that exports are in the toilet when the Baht continues to rise. Must be hurting imports as well as most people I know are reducing the amount of money they bring in each month which means less spending power on the already outrageous prices of foreign goods.

So most people you know are foreigners living/working in Thailand or Thai people that work abroad?Most people I know get a set wage at their job and bring home roughly the same amount each month.

disappointing Q1 economic growth of 5.3 per cent

I did chuckle at this statement. Many places would be pretty happy with a 5.3% rate of growth in one quarter. Edited May 20, 2013 by IsaanUSA

[webfact]

Weak data raises odds of rate cut
Business Desk
The Nation

Louder call for a policy rate cut on May 29, to weaken baht and boost exports

BANGKOK: -- Despite growth of 5.3 per cent in the first quarter, the National Economic and Social Development Board (NESDB) has revised down its forecast for the year.

This points to a further slowdown in economic activity in second half - which raises the odds of an interest rate cut.

Bloomberg's growth consensus for the first quarter was 6 per cent. The lowest forecast belonged to Moody's Analytics, at 3.7 per cent. The research unit noted that while the domestic economy continues to expand at a decent rate, and is supported by robust household and investment spending, exports are struggling because of weak global demand.

The NESDB downgraded its 2013 growth forecast to 4.2-5.2 per cent from 4.5-5.5 per cent.

A majority of Thai and foreign banks are now more convinced the Bank of Thailand's Monetary Policy Committee will cut the policy rate to boost exports when it meets on May 29. Seasonally adjusted exports rose just 1 per cent in the first quarter. And the government is convinced that inflation is benign enough to support a rate cut, while the export sector would benefit from a weaker baht.

In a concerted move, Thai trade representatives yesterday revised down the country's export target this year from 8-9 per cent to 5 per cent, due mainly to weak global demand.

NESDB secretary-general Arkhom Termpittayapaisith said the rise in the baht, from 31 per US dollar in the first quarter last year to 29 currently, had shaved export value by Bt180 billion - and urged an "aggressive" rate cut, to prop up exports. A rate cut would slow capital inflows, which topped US$4.5 billion in the first quarter compared to $2.2 billion in previous quarters. The baht has risen by 2.5 per cent this year.

At a press conference yesterday, Arkhom said that downside risks remained high in the second half - mainly delayed recovery of global economic growth in the first half and delayed recovery of global product prices, baht appreciation, a high growth base in 2012, and a slower rebate for people who bought vehicles under the first-car policy.

Deputy Prime Minister and Finance Minister Kittiratt Na-Ranong expressed concern yesterday over lower-than-expected first-quarter growth and said this could prompt the year's growth to stay below 5 per cent. However, there was no need to launch any economic stimulus, he said.

Bank of Thailand senior director Mathee Supapongse also admitted that 5.3 per cent growth in the first quarter was well below the central bank's 7 per cent target. Based on the target, the BOT had forecast annualised growth at 5.1 per cent, he said. The official said the BOT would look at the details on what hindered the quarterly figure.

Lower-than-expected growth in the first quarter raises pressure on the central bank for a rate cut. Royal Bank of Scotland said in a research note that said weaker data supported a rate cut of as much as 50 basis points, saying that this would not spur credit growth as feared by the central bank. A rate cut would help the export sector, it said.

Credit Suisse Group and Barclays also expect the Bank of Thailand to trim the policy rate by 25 basis points.

Though weak data supports the rate cut, HSBC economists led by Su Sian Lim, believed that the Thai economy would improve in the quarters ahead due to favourable income tax changes, stable and low unemployment, as well as favourable adjustments in the minimum wage this year nationwide. These "should continue to keep consumption and investment well-supported".


-- The Nation 2013-05-21

[meatboy]

what does this mean? 2 for me and 1 for you,slashed to 1 for me and none for you

[BlackJack]

in all honesty

no one knows

so throw another dart at the board

[TPI]

Wasn't it reported that the problem is being caused by the commercial banks importing billions of cheap money and lending it out at 7%-8%? It's easy to see that the banks are in a win-win situation, the longer the baht is strong against the dollar the more money they make! Money, money the real God in Thailand!IMMHO