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Thai central bank lowers 2015 growth forcast to 3.8 pct

Xinhua, March 20, 2015 Adjust font size:

The Bank of Thailand (BOT), or the Thai central bank, on Friday announced to lower the economic growth projection for 2015 from 4 percent to 3.8 percent.

The 2016 forecast stood at 3.9 percent, according to the March 2015 issue of the Monetary Policy Report, which was posted on the bank's website.

Meanwhile, the BOT revised down the forecast for the 2015 headline inflation from 1.2 percent to 0.2 percent, while the figure for the core inflation was maintained at 1.2 percent.

The Thai economy is projected to recover more slowly than previously assessed as a result of weaker-than-expected domestic spending while inflationary pressure is projected to decrease from previous forecast mainly from lower world oil prices, according to the bank's economic assessment.

Major developments contributing to the MPC's forecast revision include "the slower-than-expected global economic recovery due to growth moderation in China and Asia, lower-than-expected domestic demand in Q4 2014 and January 2015, more delays to government spending than expected, especially in public investment, and lower- than-expected world oil prices," the bank said.

The slow global and Thai economic recoveries have dampened consumer and business confidence in future income, making them reluctant to increase spending even though lower oil prices have reduced cost of living and transportation, the report stated.

"The global and domestic backdrops have also made financial institutions cautious about loan extension. Private spending is therefore expected to recover more slowly than previously assessed, " it added.

Public spending still faces limitations, the bank stressed.

In part, this is due to government agency efficiency which cannot be improved fast enough to match the change in budgetary structure to emphasize a larger share of investment, it said.

Additionally, policy to revise price lists for state construction projects to be in line with lower oil prices caused additional delay in some investment projects, according to the BOT.

On the external front, the report said, value of merchandise exports are likely to grow at a lower rate due to weaker-than- expected global economy and the decrease in commodity prices in line with oil.

Meanwhile, export of services is expected to steadily contribute to economic growth, it noted. Endi