In its quarterly economic forecast report released on Friday, Paiboon Kittisrikangwan, BoT Deputy Governor, said the Monetary Policy Committee maintained Thai economic growth forecast this year at 5.7 per cent, assessing that strong domestic demand will help offset the impact from the global economy to some degree.
However, 2013 GDP is projected to grow at a pace of about 4.6 percent, lower than assessed earlier at 5 per cent due to the weaker global economy and delayed disbursements under the government’s water management plan.
"The impact of global demand weakness on exports has become more evident. Manufacturing exports have been the hardest hit, especially for electronic products and electrical appliances where foreign orders started to decline. Additionally, agricultural exports are likely to remain contracted, partly due to rice exports, which suffered from high rice prices driven up by the rice mortgage scheme," the report said.
The central bank revises its 2013 export growth projection downward from 10.8 percent to nine percent. It is believed that exports will bounce back in the second half of 2013 as the global economic trend is likely to improve. The bank also trims 2012 export growth forecast to 4.4 per cent from 7 per cent.
However, overall strength in domestic demand will help sustain near-potential economic growth in the period ahead.
Inflationary pressure is viewed to soften from the previous assessment as it is expected the government will peg diesel and NGV prices.
Global oil price is projected to drop from US$110 to US$105 per barrel, therefore 2013 headline inflation is forecast at 2.8 percent while core inflation is projected at 1.7 per cent.