Thailand's economic growth view goes under the knife

Thai baht banknotes
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Thai baht banknotes

Thailand's central bank said the country's economy will barely grow this year and expand less in 2015 than earlier forecast, thanks mainly to how its growth engine of exports is still sputtering.

The Bank of Thailand (BOT) on Friday cut its 2014 economic growth projection to 0.8 percent from 1.5 percent. The new year's forecast was reduced to 4.0 percent from 4.8 percent.

Exports will shrink 0.5 percent this year, the central bank said, and only rise 1 percent in 2015, rather than the earlier-seen 4 percent.

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November trade data released on Friday showed how poorly exports are faring.

The Commerce Ministry said exports - equal to more than 60 percent of GDP - last month contracted 1 percent from a year earlier, far worse than the 3.6 percent expansion a Reuters poll expected.

Exports to Japan were 10.7 percent below a year earlier while those to China tumbled 18.7 percent.

Thailand's export woes have been a big factor in economic recovery not getting on track after the army seized power in May.

Domestic demand remains subdued while tourism, badly hit by unrest, is recovering slowly.

Exports have been sluggish since before political turmoil began hurting Southeast Asia's second biggest economy in late 2013.

Already under pressure

"The Thai economy recovers slower than expected due to a slow recovery in exports as the global economy is expected to grow less than thought, while government spending is also lower than previously predicted," BOT Assistant Governor Mathee Supapongse told a news conference.

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Delays in public investment projects "have also led to low growth in private investment, already under pressure from a slow recovery in domestic demand," he said.

The government expects infrastructure spending to get under way in 2015, boosting consumption.

The central bank, which revises its economic forecasts every three months, has steadily cut those for 2014 and 2015. In September 2013, before street protests against the government of then-Prime Minister Yingluck Shinawatra began, the BOT forecast 2014 growth at 4.8 percent.

The government maintains next year will bring improvement. On Thursday, Deputy Prime Minister Pridiyathorn Devakula said he expects 2015 growth of 4.5 percent, driven by public investment.

But Tim Leelahaphan, an economist with Maybank Kim Eng in Bangkok, said a recovery in 2015 "is not expected to be strong, even with new stimulus measures."