Posted on 14 Nov 2012
Growth in gross domestic product will continue to decelerate to only 4.5 per cent next year from 5.4 per cent this year, which itself is short of the previous prediction of 5.6 per cent, after the euro-zone debt crisis slammed the export sector, according to the latest forecast.
"Despite the government's stimulus policies this year, economic growth will be hit hard by the global slowdown as now not only industry but also farming are feeling the pain," Thanavath Phonvichai, director of the Economic and Business Forecasting Centre at the University of the Thai Chamber of Commerce (UTCC), said yesterday.
"The prices of commodities and exports of agriculture products are dropping," he said.
Also weighing on the economy next year are the escalating domestic political conflicts and the drag on global growth by the "fiscal cliff" facing the United States.
Exports this year are now expected to increase only 3.5 per cent, less than half the forecast of 9.4 per cent. Exports next year are projected to rise by 7.4 per cent, according to a study by the university with the cooperation of Siam Commercial Bank's Economic and Trade Monitoring and Analysis Centre.
Under the worst-case scenario, exports this year could rise only 1 per cent because of the serious drop in demand in many countries.
The UTCC called for the government urgently to prioritise measures to speed up investment in infrastructure development and spending on flood prevention.
According to the study, the agriculture sector will grow by 3.8 per cent this year and by 4.1 per cent next year, industry by 6.8 per cent and 5.3 per cent and private consumption by 5.4 per cent and 4 per cent.
Ahead of the Asean Economic Community, investment will grow stronger by 11 per cent this year and 14.7 per cent next year.
The baht will continue to appreciate next year on higher investment flows to the region. The currency is expected to average 30 per US dollar, up from 31.4 this year.
Inflation will heat up to 3.5 per cent next year from 3.1 per cent this year, the centre predicts. The trade surplus will shrink to US$2.33 billion next year from $7.67 billion (Bt236 billion) this year. Tourist arrivals will climb from 20.4 million this year to 22 million next year and tourism income from Bt809.5 billion to Bt966 billion, it said.
Vichai Assarasakorn, secretary-general of the Board of Trade, said the private sector was greatly worried about exports in the face of falling demand in many countries.
For instance, food exports will gain only 3 per cent compared with this year's projected rate of 4.11 per cent. Garment and textile shipments will expand by 0-5 per cent after contracting 10 per cent this year.
Sutapa Amornvivat, chief economist of the Economic Intelligence Centre, said the euro crisis would continue to brake growth worldwide as the European Union has high purchasing power.
The United States' "fiscal cliff" - whereby tax increases and spending cuts are to kick in automatically early in the new year if the government cannot agree on a deficit-reduction compromise - will also stoke volatility in global financial circles, which many countries need to monitor closely.
Commodities such as gold, steel and fuel are also expected to become more expensive next year, which would push up production costs for businesses, Sutapa said.
Industries that would suffer the most are processed food, electric appliance, electronics, chemical product and travel.
