The Bank of Thailand plans to cut its economic growth forecast for this year from 3.8%, as it expects the pace of recovery in the second quarter will remain fragile.
Although further assessment of economic indicators has to be made this quarter, there is a possibility that the growth rate for the April-June quarter will be similar to that in the preceding quarter due to the sluggish recovery of private consumption and lacklustre export growth, said Roong Mallikamas, senior director of macroeconomic and monetary policy.
"It's possible the next revision of this year’s economic growth projection will be lowered," she said without revealing the revised growth figure.
"The recovery impetus could be delayed in the second quarter, and economic growth in the quarter would determine the outlook for the following quarters, hence our lower-than-expected growth revision."
The revised growth forecast will be released on June 19, in accordance with the central bank’s monetary policy report.
Thailand escaped an outright first-quarter economic contraction as the growth rate was recorded at 0.3% quarter-on-quarter on a seasonally adjusted basis, down from the preceding quarter’s 1.7%, according to the National Economic and Social Development Board (NESDB).
Year-on-year, the NESDB reported growth of 3% in the first quarter, an improvement from 2.1% in last year's fourth quarter.
Household debt remains a factor in cautious consumer spending, plus the recovery of private consumption is expected to continue to be slow in the coming periods, Mrs Roong said.
She said middle-class consumers had been observed to adjust their consumption behaviour on the back of a lower income hike and increasing debt burden, but this also reflected how they had been trying to balance their spending.
Private consumption fell by 0.2% year-on-year last month, down from a 1% rate in March.
Consumption of durables saw a sharp decline of 14.4% year-on-year from March’s contraction of 2.8%.
Exports, meanwhile, could record flat growth rate or contract for the third consecutive year, Mrs Roong said.
She said China’s economic slowdown also posed as a downside risk to Thailand’s economic recovery momentum since the world’s second-largest economy was a major trading partner.
Mrs Roong admitted Thailand’s export sector would have less of an effect on driving the country’s economic growth due to the slower growth rate in global trade.
The export sector should focus on generating greater shipments to neighbouring countries since export volume to major trading partners has been weak, she said.
The Commerce Ministry reported April exports declined by 1.7% year-on-year to US$16.9 billion, a fourth consecutive month of contraction but an improvement from a 4.45% decline in March, 6.15% in February and 3.46% in January. Exports in the first four months contracted by 3.99%.
Economic drivers in the second half are expected to consist mainly of tourism, public investment and the global economic recovery, Mrs Roong added.