Asian Development Bank drops growth forecast for Thailand
“The bank forecasts a slightly higher growth rate at 3.2% next year, due largely to infrastructure investment in the Eastern Economic Corridor.”
The Asian Development Bank is lowering its growth forecast for Thailand’s economy from 3.9% to 3% but is optimistic that conditions will improve next year.
“The bank forecasts a slightly higher growth rate at 3.2% next year, due largely to infrastructure investment in the Eastern Economic Corridor, but was conscious of the risk in any delays in the investment.”
Principal economist Thiam Hee Ng says that the downgrade stems from the global economic slowdown, the US-China trade dispute and the strong baht. But it’s not just Thailand. Other Asian economies are also being threatened by the same global economic storm clouds.
Among positive indicators the bank considered for the Thai economy were substantial interest among foreigners in investment incentives and the Board of Investment’s report of more foreign direct investment in the pipeline.
Chinese and Japanese manufacturers are planning to relocate their production bases in Thailand and elsewhere in Southeast Asia to avoid higher tariff rates imposed on Chinese goods by the US government.
But Hee Ng warned that the trade tensions would continue to hamper the global economy overall and have an impact on Thai exports and tourism.
“The super-strong baht partly weighed down exports and also caused slower growth among tourist arrivals in the first half of the year.”
The baht has appreciated not only against US dollar but also other currencies. A rate cut by the central bank would likely do little to weaken the baht, he said. Investors see the Thai economy as a safe haven due to a large current-account surplus and significant foreign reserves.
The ADB also revised downward its forecast for Asia’s growth as a whole to 5.4% this year and 5.5% next.