Finance Ministry axes economic growth projection from 4% to 2.6%


BANGKOK, March 28 – The Finance Ministry has lowered Thailand’s projected economic growth for this year from 4 per cent to 2.6 per cent, according to the Fiscal Policy Office (FPO).

FPO Director Somchai Sujjapongse said gross domestic product (GDP) in the first quarter which suffered a deficit compared the same period last year will decline further in the second quarter.

The economy will surge back in the final quarter if the new government takes office in the third quarter, otherwise the economy will dip further down, he said.

He said the political situation will be the crucial indicator for Thailand’s economy, expressing concern that Thailand’s credit rating will be impacted in the next round of assessment late this year to early next year.

He said neither the Election Commission nor the caretaker government is empowered to approve the 2015 budget while it is necessary to stimulate the economy.

Exports will become the only economy-stimulating sector while the public sector will have to speed up disbursement of the Bt350 billion budget to help activate the economy, he said.

Mr Somchai said the state revenues from the value added tax has declined for the last two months with a 2.4 per cent deficit in domestic consumption registered in February.

The declining trend will have an impact on both state revenue and customs tax collections, he said.

Exports of electronics products, electrical appliances and automobiles were satisfactory in accord with the strengthened economies in the US and Europe, while the Chinese economy will expand 7.5 per cent, he said.

Though the agricultural sector has grown, the tourism sector declined for the first time in 27 months with tourist arrivals dipping 8.1 per cent, mainly from China, Malaysia and Japan.

He was optimistic that the cancellation of the state of emergency, after which 50 countries revoked warnings for their citizens, will improve Thailand’s tourism.

He said the overall economy has been stable but smaller-sized businesses have encountered operational, employment and financial problems.

The number of small-sized companies which failed to pay their debts for over a month has increased, he said, adding that non-performing loans were at about a 2.5 per cent level. (MCOT online news)