Although public expenditure has been better than expected, especially for public investment projects, and tourism continues to expand, these factors cannot compensate dismal exports and private spending, he said.
It is the fourth cut to the 2015 growth forecast by the central bank. Last June, it projected growth of 5.5% before cutting that to 4.8% in September, 4% in January and 3.8% in March.
The latest prediction barely falls within the National Economic and Social Development Board's 3-4% forecast but is well below the Finance Ministry’s Fiscal Policy Office projection of 3.7%.
Exports are expected to contract by 1.5% this year, down from an 0.8% growth projection, due to structural problems associated with Thai shipments and a slowdown in Thailand’s major trading partners, Mr Mathee said.
But he said a weaker baht should support export value, while an increase in commodity prices in line with rising global oil prices could jump-start a recovery. If Thailand's shipments contract, it will be the third consecutive year.
The Commerce Ministry reported the value of exports, which account for 60-70% of GDP, fell for the fourth month running in April, down by 1.7% year-on-year, while the four-month figure was down by 3.99% year-on-year.
Mr Mathee said the private consumption forecast was cut to 2% from 2.4% as household income excluding the agricultural sector has been affected by Thailand’s sluggish economy. The ongoing drought also factored into the central bank’s assessment to a certain degree.
Business confidence is also hurting, delaying private investment incentives, although government spending should help in stimulating private investment related to public investment projects, Mr Mathee said. Annual private investment growth is forecast at 2.7%, down from a projection of 3.1%.
He said downside risks to economic growth included slower growth in Asia, particularly China, and lower public spending constrained by ineffective investment budget disbursement. Annual headline inflation should decline by 0.5% as fresh food and retail oil prices dip domestically.