Thailand: K-Research maintains GDP growth outlook at 3.3%
Kasikorn Research Center (K-Research) is keeping its forecast for Thai economic growth at 3.3% this year, even as the Bank of Thailand raised its projection to 3.4% earlier this week.
Economic growth in the second half is expected to expand at a faster pace than the first half as state investment in big-ticket infrastructure projects continues and the mid- year budget disbursement ramps up in the third quarter, said Nattaporn Triratanasirikul, head of research.
The research arm of Kasikornbank forecast Thai economic growth of 3.1% for the first six months and 3.4% for the latter half, Ms Nattaporn said.
It also kept its projection for government investment unchanged at 8.5% growth in 2017.
Improving exports and higher product prices stemming from the global economic recovery should also help the Thai economy, she said.
With the brighter prospects, K-Research raised its merchandise shipment growth forecast to 2% in 2017 from 0.8% predicted three months ago. It also raised its import growth outlook to 5% this year from 2%. Narrowing prices between import and export products would pose a challenge to exporters’ profit margins, Ms Nattaporn said.
Despite the firmer baht, largely attributed to the US dollar retreating, K-Research predicted the local currency will fall back to 35.7 to the greenback at year-end. The baht, one of Asia’s top-performing currencies, has gained nearly 4% this year, while its Asean regional peers have risen less than 1% against the US dollar.
But K-Research cut its private investment growth projection for the year to 1.5% from 2.8%. The US Federal Reserve’s rate rises and political uncertainty are seen as factors to deter investment in Thailand. The research house predicted the Fed would raise the policy rate one or two more times this year after lifting the benchmark rate by a quarter percentage point to a range of 0.75-1% in mid-March. But the Bank of Thailand’s rate-setting panel is expected to stand pat on the rate at 1.5% this year to accommodate economic recovery.
“The Bank of Thailand should be able to keep the rate steady even if the Fed raises the rate three times this year, but a fourth hike expected next year will put pressure on the Thai central bank to follow suit,” Ms Nattaporn said.
Separately, Kevalin Wangpichayasuk, K-Research’s assistant managing director, said the ongoing increase in bond yields could raise financial costs for businesses.