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The Fiscal Policy Office had slashed its 2014 economic growth projection to 2.6% from 4% in Mach provided that a new government is formed by the third quarter.
So far little progress has been made for ending political stalemate, but the FPO new statement now predicts that Thailand’s first-quarter gross domestic product (GDP) will shrink 0.2% before bouncing back in the second quarter, maintaining its full-year 2.6% projection.
The country’s political turmoil affected private spending and investment, Kulaya Tantitemit, director of Macroeconomic Policy Bureau at the ministry’s Fiscal Policy Office, said at a news conference.
Growth expected to bounce back in Q2
Thailand has been without a fully functioning government since Ms. Yingluck dissolved the lower house in December and almost six month of antigovernment protests aimed at ousting Prime Minister Yingluck Shinawatra, have undermined investors confidence in the country’s economy.
Growth is estimated to come in at 0.4% in the second quarter, 2.8% in the third quarter and 7.3% in the fourth quarter, an FPO source said.
Thai exports are expected to pick up in the second quarter due to the improved economic conditions of trading partners and the baht stability, said the Bank of Thailand governor.
Central bank chief Prasarn Trairatvorakul said economic conditions and the purchasing demand of Thailand’s trading partners are factors that will determine this year’s exports outlook.
Despite an earlier announcement to revise down this year’s 2.7% GDP growth forecast in June, the central bank does not plan to revise down its 4.5% export growth forecast as it expects this year’s exports growth to improve positively compared with that of last year, said Mr Prasarn.
Exports still to meet its 5% target
The Commerce Ministry said Thai exports dropped by 3.12% in March and 1% in the first three months of 2014 but was optimistic that overall export for the whole year will meet its 5% target.
Permanent secretary of the ministry Srirat Rastapana said exports in March declined to US$19.94 billion while imports fell 14.19% to US$18.48 billion, resulting in a trade surplus of US$1.46 billion.
But for the first quarter, exports dropped by 1% to US$56.21 billion while imports shrank 15.41% to US$55.50 billion, representing a trade surplus of US$706 million, she said.
If the political situation returns normal quickly, the exports could grow by 10% for the whole year, largely due to the IMF’s 3.6% world economic growth projection, up from 3% in 2013.