The bank said in its monetary policy report that Thailand’s growth projection was revised upward for last year and this year is still driven mainly by private consumption and investment.
Last year’s growth forecast was revised up to 5.9 percent from the earlier projected at 5.7 percent.
This year’s growth forecast was revised up to 4.9 percent from 4.6 percent while next year’s GDP is forecast to grow 4.8 percent.
Paiboon said the global economic risks in the worse-case scenario have declined, given the lower probability of Greece’s exit from the euro area and the recent progresses on fiscal concerns in the US.
Exports still suffer from the global slowdown, but seem to have bottomed out and show incipient signs of recovery. Exports this year are projected to grow nine percent from 3.6 percent last year and 9.7 percent growth is forecast for next year.
State and private investment are positive factors for economic growth. Private and state investment is likely to expand 12.1 percent and 17.1 percent respectively. However, the government must invest within the timeframe to avoid any adverse effect on the latest growth forecast, he said.
This latest forecast, however, has yet to include a Bt2.2 trillion investment in basic infrastructure as it is still unclear and needs time for implementation.
A risk factor for the Thai economy which needs to be monitored is the fluctuation of fund flows, which may influence the currency exchange rate. The rapid appreciation of the Thai baht may be short-lived but it benefits the imports of heavy machinery.
Other risk factors are acceleration of credit and household debt and results of the second round of minimum wage rises, which is initially assessed to not impact inflation, but small enterprises could go out of business.
The central bank maintains this year’s inflation forecast at 2.8 percent for headline inflation and 1.7 for core inflation.