Thailand’s gross domestic product (GDP) will possibly contract this year if the formation of a new government is delayed, according to CIMB Thai Bank.
Amornthep Chawalla, CIMB Thai vice-president and head of economic and financial-market research, said a slowdown in public investment has affected economic growth, while the export sector, which enjoyed a slight growth in January, is in danger of experiencing a deficit.
The first quarter’s GDP growth will suffer a deficit of higher than 1 per cent, resulting in a 1.6 per cent deficit in the first half of the year, and an overall expansion of only 2.4 per cent this year, he said.
In case the new government fails to take office by the third quarter, this year’s GDP will possibly be 1 per cent less, partly due to the US Federal Reserve’s withdrawal of quantitative easing measures and global economic slowdown in the second half of the year, he said.
He said the new government’s first task in stimulating the economy is investment promotion and improvement of the export structure, with more emphasis on high-technology manufacturers.
This year’s exports should expand at less than 5 per cent, based on the Thai currency exchange rate at Bt33-33.5 against the US dollar, he said.
Mr Amornthep predicted the Bank of Thailand (BoT)’s Money Policy Committee, in its meeting on Mar 12, to reduce the policy interest rate by another 0.25 per cent down to 2 per cent to relieve the people’s and manufacturers’ debt payment burden in light of the economic slowdown.