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central bank lowers 2015 growth projection to 3 pct

Xinhua, June 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 3.8 percent to 3 percent.

The 2016 forecast was revised up to 4.1 percent from the 3.9- percent prediction made in March, according to a monetary policy report posted on the bank's website.

Meanwhile, the BOT revised down the forecast for the 2015 headline inflation and core inflation from 0.2 percent and 1.2 percent to -0.5 percent and 1 percent, respectively.

The Thai economy is projected to recover more slowly than the previous projection mainly as a result of weaker-than-expected export growth while inflation is projected to decrease on the back of lower cost and demand pressure, according to the bank's economic assessment.

"The slow global economic recovery, the shift in global trade structure, structural problems in Thai merchandise exports, and the appreciation of nominal effective exchange rate together contributed to the decline in Thailand's exports of goods. This further deteriorated income outlook and private-sector confidence, " the bank said.

Together with cautiousness of financial institutions in loan extension, private spending would recover more slowly than previously assessed, it added.

On the other hand, the bank noted, public spending is projected to be higher while export of services is expected to expand more than the previous forecast from increasing number of tourists.

However, higher-than-expected public spending and exports of services could not compensate for the weaker-than-expected merchandise export performance and private spending, according to the bank.

"Overall, economic growth in 2015 is projected to be less than formerly forecast," it said.

In addition, the central bank expected that the Thai economy to register a better growth rate in 2016 than this year.

In the period ahead, the economy is expected to gather pace in tandem with the trading partners' economies, which would shore up Thai merchandise exports, according to the bank.

"The better export performance together with continued public spending particularly in investment projects would be a boon to household incomes and confidence that lead to higher private spending," it stated. Endi