Posted on 25 Nov 2008
The National Economic and Social Development Board (NESDB) has revised down its forecast for economic growth in 2008 to 4.5% from an earlier range of 5.2% to 5.7%, following confirmation of lower-than expected expansion of 4% year-on-year in the third quarter.
The agency forecast gross domestic product (GDP) expansion of 3-4% next year, down from 4-5% projected earlier, due to the impact from both domestic and global economic conditions. The projection based on the
The state planning agency said third-quarter growth was driven by domestic demand, especially the agriculture sector, which grew by 9.9%, up from 8.6% in the second quarter.
The non-agricultural sector grew by 3.5% in the third quarter, down from 5% in the second quarter. Meanwhile, government consumption growth decreased to 2.9% and total investment grew by only 0.6%.
The poor third-quarter performance - lower than 6% and 5.3% growth in the first and second quarters respectively - also reflected a sharper slowdown in the tourism industry than previously forecast.
Hotels and restaurants in the third quarter showed 0.2% growth, down from 5.9% and 9.2% in the second and first quarters. In September, foreign tourist arrivals were down 16.5% while the average occupancy rate of hotels nationwide dropped to 45% from 60% in the same period last year.
The tourism slowdown reflected the high cost of travel as fuel prices were near record highs at the time, but also unease about the protracted political tensions in
Ampon Kittiampon, the NESDB secretary-general, said the economy grew by 5.1% year-on-year in the first nine months of this year, an encouraging figure given global conditions.
However, he said the Thai economy in the fourth quarter was likely to moderate further due to the intensified impact of the deteriorating global economy on exports, while domestic demand continued to soften.
Favourable factors for economic expansion in the fourth quarter could be government economic stimulus measures, the decline in oil and raw material prices, lower inflationary pressure, and a likely decrease in interest rates.
Risk factors for the quarter include the global crisis, domestic political uncertainty, and lower business and consumer confidences.
The impacts of the global crisis on exports are expected to be stronger in the current quarter as indicated by the slowdown in export volume growth from 11.8% in the first quarter to 12.3% in the second and 9.1% in the third quarter.
Dr Ampon said inflation was likely to average 5.6% for the whole year, down from an earlier forecast of 6.5% to 7% but up from 2.3% in 2007.
The agency predicted unemployment in 2008 would remain the same as in 2007 at 1.4% or 500,000 workers.
It forecast a current-account deficit for 2008 of $300 million, compared to a surplus of $14.09 million in 2007. The US dollar value of exports this year is projected to increase by 20%, up from 16.5% forecast previously.
The NESDB also projected that exports would grow only 7% next year while investment would expand by 4.8%, consumption 4.3%, and inflation would be between 2.5% and 3.5%.
Dr Ampon said the projection also based on expectations of more political stability next year.
Unemployment next year is projected between 1.5% and 2.5% or a maximum of 925,000 workers. Dr Ampon said a figure of one million jobless was highly unlikely, noting that in 2001 when the economy grew by 2.2%, the unemployment rate was 3.3% or 1.2 million.
He also disagreed with private sector proposals for cuts in corporate tax to 25% because revenue collections next year were likely to be lower than the target by 50-100 billion baht.
