World Bank to lower Thai GDP from 5% to 4-4.5%

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BANGKOK, Aug 23 – The World Bank will adjust its forecast of Thailand’s gross domestic product (GDP) for this year from 5 per cent to 4-4.5 per cent due to lower economic and export growth, a bank senior economist said today.

Kirida Bahopichitr said the Thai economy was not in recession but expansion was slight compared to last year when the country enjoyed a high GDP growth thanks to the government’s post-flood revival measures and other economic stimulus.

She predicted a higher economic growth next year when the economic fundamentals would return to normal and the global economy would possibly bounce back – a positive factor for Thailand’s export sector.

The government’s investment on infrastructure development will be clearer next year while the tourism industry will remain sound and the interest rate favourable to investment, she said.

Ms Kirida said overall consumption would be rather stagnant due to high household debt.

She indicated that the weakened baht at Bt32 against the dollar resulted from several factors including capital outflows given investor concerns over the US Federal Reserve’s slowdown on quantitative easing (QE) and the country’s current account deficit.

The senior economist was optimistic that the global economy would improve and the US monetary policy on QE would not be to harsh, contributing to Thailand’s export growth and surging foreign investment in Asia and Thailand.

Asia will become the hub of economic growth in the next decade and Thailand has to be well prepared for the future capital movements, she said.

Ms Kirida ruled out speculations that the baht would be attacked and weakened as with the Indonesian and Indian currencies, explaining that, unlike in the past, the Thai baht’s floating exchange rates were well managed and the Thai economic fundamentals were solid.