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The National Economic and Social Development Board (NESDB) revealed the latest economic figures in 2014 showing the country’s economic growth falling to 0.7%, its lowest record in three years.
Political unrest in the first half and falling prices of key crops and falling exports were key factors to the fall. NESDB said gross domestic product rose 0.7% last year, the slowest pace since 2011 of 0.1 per cent when the country was battered by devastating floods, and down from the 2.9 per cent recorded in 2013.
GDP rose 2.3% in Q4, making 3.5% forecast for 2015 possible
Gross domestic product rose 2.3 percent year-over-year in the fourth quarter following the 0.6 percent rise in the third quarter, data from the National Economic and Social Development Board showed. This was faster than the 2.1 percent increase expected by economists.
The NESDB maintained its 2015 growth at 3.5% to 4.5% while cutting its export growth estimate to 3.5% from 4%.
The expansion of GDP in this quarter was due to an upturn in the non-farming sector, a rise in domestic and external demand and greater investment, it said.
Consumption expanded 2.4% last quarter from a year earlier, compared with 1.8% in the previous three month period, while investment climbed 3.2% from 2.9%.
High household debt burdens
While lower oil prices will dampen inflation and raise consumers’ real purchasing power, high household debt burdens will continue to constrain private consumption growth, experts said.
The Bank of Thailand held its benchmark interest rate at 2 percent for a seventh straight meeting last month, citing weak outlook for exports and domestic demand
The Thai economy is expected to recover steadily but at a slower pace than previous forecast due to a weaker outlook of both domestic demand and exports. On the domestic side, consumption is expected to gradually recover on the back of improving nonfarm income and employment, as well as lower oil prices. However, durable consumption, especially automobile purchases, is still impeded by high household debt and depressed farm income.
In addition, government spending, particularly on investment projects, is likely to be lower than previously anticipated.
Consumption of the private sector or expenditure of the private sector expanded at a lower rate because of lower income of the agriculture sector and increasing household debts.
The central bank also predicted that next year’s inflation would be 1.2 percent compared to this year’s 1.6 percent and exports for next year were expected to grow just one percent instead of 4 percent as earlier projected.
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