ADB drops Thai growth forecast to 3%

The Asian Development Bank has lowered its growth forecast for the Thai economy to 3 per cent but is optimistic that conditions will improve next year.

Principal economist Thiam Hee Ng said in Bangkok on Wednesday (September 25) that the downgrade from 3.9 per cent stemmed from the global economic slowdown, the US-China trade dispute and the strong baht.

Worried monetary panel holds policy at 1.5%

He said the bank foresaw a slightly higher growth rate at 3.2 per cent next year, due largely to infrastructure investment in the Eastern Economic Corridor, but was conscious of the risk in any delays in the investment.
Among positive indicators the bank considered 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,” he noted.
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 per cent this year and 5.5 per cent next. 
It cited slower growth in China, India and other economies in the region, as well as uncertainty stemming from escalating trade tensions and Brexit.