The Bank of Thailand maintained its 2008 economic growth forecast in a range of 4.5% to 6% yesterday, but cautioned that downside risk had increased due to the slowing US economy.
The central bank also kept unchanged its 2009 growth forecast, which is the same as for this year.
But headline inflation projections for this year were revised upward to 2.8-4% from 1.5-2.8%. Inflation is projected at 1.8-3.3% in 2009.
Core inflation, which excludes energy and fresh food prices, was projected at 1.3-2.3% this year, up from 1-2% in earlier forecasts. Core inflation next year is projected at 1.5-2.5%.
|Duangmanee Vongpradhip, an assistant governor of the central bank, discusses economic trends at a briefing yesterday. — KITJA APICHONROJAREK|
Duangmanee Vongpradhip, an assistant governor, said the central bank had revised down its forecast for US economic growth to 1.8% this year from 2.3%.
In a worse-case scenario, if losses were to continue to increase due to the sub-prime mortgage crisis, US economic growth could drop to just 1% this year, with the Federal Reserve cutting rates to 2.5% from 3.5% now.
''We have maintained [Thai economic] forecasts in light of many uncertainties. There are greater downside risks on economic growth. But 4.5% growth should prove attainable,'' Ms Duangmanee said.
''The 4.5-6% economic growth forecast represents a 91.7% possibility. Growth of less than less than 4.5% this year has less than a 5% probability.''
Ms Duangmanee said the existing US growth forecast did not factor in the Fed's 0.75 percentage point interest rate cut on Tuesday, a move that could help shore up the US economy this year.
She said the economic trends in the third quarter and two months of the fourth quarter of 2007 reflected stronger trends for domestic consumption and investment, offsetting weakening exports.
The central bank estimated that economic growth in 2007 should reach 4.8%, with fourth-quarter growth expected to have exceeded 5%.
The National Economic and Social Development Board will announce official fourth-quarter figures in March.
The central bank also raised its 2008 forecast for domestic consumption growth to a range of 4.5% to 5.5% from 4-5% due to improved trends in the second half of last year. Private investment forecasts were increased by a percentage point to between 9% and 10%.
''Indicators for private consumption like consumption goods, value-added tax revenues and oil and electricity usage have steadily recovered in the third and fourth quarter of last year,'' Ms Duangmanee said.
''The momentum is likely to be sustained into 2008.''
Export value this year in dollars is projected to grow 9-12%, up from earlier projections of 6.5-9% and well short of the 17.5% growth posted for 2007.
The export volume growth forecast was cut to 3.5-6.5% from 4-7% in the central bank's earlier forecast.
Assumptions for fiscal spending are unchanged, but do not include the possibility of a mid-year supplementary budget by the new government.
Ms Duangmanee said that Dubai oil prices were estimated to average $85.50 per barrel this year, compared with $65 in the last forecast and $64 for 2007.
The current account surplus was expected to drop to between $4.5 billion and $7.5 billion this year, down from $14.5 billion to $15.5 billion last year.