GLOOMY PICTURE

Kasikorn Research Center lowers its full-year forecasts for economic growth, exports, consumption and investment.

With the first quarter not yet over, Kasikorn Research Center (KResearch) has significantly lowered its economic growth forecast for this year to 2.8% from 4% due to the delayed economic recovery.

It now predicts GDP growth of between 2.3% and 3.3% with an average of 2.8%, dented largely by tepid exports and weak domestic consumption.

KResearch has trimmed its forecasts for export growth to zero from 3.5% and for domestic consumption growth to 2% from 3.1%, deputy managing director Pimonwan Mahujchariyawong said, adding that both factors would respectively shave 1% and 0.6% off the GDP growth projection.

In January, exports contracted by 2.6% year-on-year, imports by 14.8% and newcar sales by 12.8%.

Kasikornbank’s research house is more pessimistic than the Bank of Thailand, which last week lowered its GDP growth forecast to 3.8% from 4%.

KResearch has also revised down its private investment growth forecast to 5% from 6% and its government investment growth forecast to 6.8% from 7.9%.

“Government investment will remain the main engine driving economic growth this year. We are keeping the growth forecast at a high level compared with other factors,” Ms Pimonwan said.

She said budget disbursement for small transport projects was not a concern, but large projects might be delayed by concerns over corruption.

Even though the number of international tourist arrivals grew by 15.9% in January, it could not completely offset the sharp decline in exports.

The fragile global recovery and falling farm product prices are denting exports, which represent 70-80% of GDP.

KResearch managing director Charl Kengchon said the decline in farm product prices had weakened low-earning farmers and spiked household debt.

Higher risks from low-income customers have compelled banks to shift their focus on consumer loans to the middle- and upperincome markets, while the government’s policy of providing nanofinance licences could push up household debt as underground loans are transferred to the banking system.

“Under the scenario, household debt is expected to increase to 88-89% of GDP by year-end from 85.5% now,” Mr Charl said.