By Kitiphong Thaichareon
BANGKOK (Reuters) – Thailand’s economy may grow by less than 2% this year while exports are likely to contract, mainly from the impact of the coronavirus outbreak, a senior central bank official said on Thursday.
The outbreak is hitting Thailand’s lucrative tourism market hard and the country’s exports to China are also affected, Don Nakornthab, senior director of the economic and policy department of the Bank of Thailand, told a business seminar.
“This year, growth of less than 2% is possible,” Don said.
“The first quarter should be the weakest of the year, with growth highly likely to be below 1%,” he said.
The central bank said previously its 2.8% growth forecast for this year would be missed. It reviews economic projections next month.
For the final quarter of 2019, annual growth was estimated at 2.0-2.2%, he added.
Official 2019 gross domestic product (GDP) data is due on Monday.
The tourism ministry expects the virus outbreak to cut the number of foreign tourists by 5 million this year, resulting in a loss of 250 billion baht ($8.02 billion), or 1.5% of GDP, Don said.
Earlier, the Tourism Authority of Thailand predicted a fall of 2 million tourists from China, Thailand’s biggest source of visitors, this year.
Last year, Thailand welcomed a record 39.8 million foreign tourists, with Chinese visitors at nearly 11 million. Spending by foreign tourists accounted for 11% of GDP last year.
Over the past five years, the tourist sector and related businesses made up an average 20% of GDP, Don said.
Don said Thai exports might contract this year, rather than rise 0.5% as earlier projected, due to stalled shipments to China, Thailand’s second-largest export market.
On the baht , Don said a weaker Thai currency was not helping the economy much and it was still not in line with economic fundamentals.
“Prices are not as important as confidence, which will make people travel here,” he said.
The baht may be weakening further as Southeast Asia’s second-largest economy slows, he said.
The baht has depreciated by 4% against the U.S. dollar so far this year, becoming Asia’s worst performing currency.
Don said a recent cut in the policy rate to a record low of 1.0% might not help boost the economy much as it was already very low, but the central bank wanted to send a signal to sectors to help shore up the economy.
(Writing by Orathai Sriring; Editing by Jacqueline Wong)
(Bloomberg) — The head of the International Monetary Fund warned the US that the global economy is closely watching interest rates and industrial policies given the potential spillovers from the world’s biggest economy and reserve currency.
“All eyes are on the US,” Kristalina Georgieva said in an interview on Bloomberg’s Surveillance on Thursday.
The two biggest issues, she said, are “what is going to happen with inflation and interest rates” and “how is the US going to navigate this world of more intrusive government policies.”
The sustained strength of the US dollar is “concerning” for other currencies, particularly the lack of clarity on how long that may last.
“That’s what I hear from countries,” said the leader of the fund, which has about 190 members. “How long will the Fed be stuck with higher interest rates?”
Georgieva was speaking on the sidelines of the IMF and World Bank’s spring meetings in Washington, where policymakers have been debating the impacts of Washington and Beijing’s policies and their geopolitical rivalry.
Read More: A Resilient Global Economy Masks Growing Debt and Inequality
Georgieva said the IMF is optimistic that the conditions will be right for the Federal Reserve to start cutting rates this year.
“The Fed is not yet prepared, and rightly so, to cut,” she said. “How fast? I don’t think we should gear up for a rapid decline in interest rates.”
The IMF chief also repeated her concerns about China devoting too much capital and labor toward export-oriented manufacturing, causing other countries, including the US, to retaliate with protectionist policies.
China Overcapacity
“If China builds overcapacity and pushes exports that create reciprocity of action, then we are in a world of more fragmentation not less, and that ultimately is not good for China,” Georgieva said.
“What I want to see China doing is get serious about reforms, get serious about demand and consumption,” she added.
A number of countries have recently criticized China for what they see as excessive state subsidies for manufacturers, particularly in clean energy sectors, that might flood global markets with cheap goods and threaten competing firms.
US Treasury Secretary Janet Yellen hammered at the theme during a recent trip to China, repeatedly calling on Beijing to shift its economic policy toward stimulating domestic demand.
Chinese officials have acknowledged the risk of overcapacity in some areas, but have largely portrayed the criticism as overblown and hypocritical, coming from countries that are also ramping up clean energy subsidies.
(Updates with additional Georgieva comments from eighth paragraph.)
©2024 Bloomberg L.P.
The head of the International Monetary Fund warned the US that the global economy is closely watching interest rates and industrial policies given the potential spillovers from the world’s biggest economy and reserve currency.
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Published Apr 18, 2024 • 2 minute read
(Bloomberg) — The head of the International Monetary Fund warned the US that the global economy is closely watching interest rates and industrial policies given the potential spillovers from the world’s biggest economy and reserve currency.
“All eyes are on the US,” Kristalina Georgieva said in an interview on Bloomberg’s Surveillance on Thursday.
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The two biggest issues, she said, are “what is going to happen with inflation and interest rates” and “how is the US going to navigate this world of more intrusive government policies.”
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Article content
The sustained strength of the US dollar is “concerning” for other currencies, particularly the lack of clarity on how long that may last.
“That’s what I hear from countries,” said the leader of the fund, which has about 190 members. “How long will the Fed be stuck with higher interest rates?”
Georgieva was speaking on the sidelines of the IMF and World Bank’s spring meetings in Washington, where policymakers have been debating the impacts of Washington and Beijing’s policies and their geopolitical rivalry.
Read More: A Resilient Global Economy Masks Growing Debt and Inequality
Georgieva said the IMF is optimistic that the conditions will be right for the Federal Reserve to start cutting rates this year.
“The Fed is not yet prepared, and rightly so, to cut,” she said. “How fast? I don’t think we should gear up for a rapid decline in interest rates.”
The IMF chief also repeated her concerns about China devoting too much capital and labor toward export-oriented manufacturing, causing other countries, including the US, to retaliate with protectionist policies.
China Overcapacity
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Article content
“If China builds overcapacity and pushes exports that create reciprocity of action, then we are in a world of more fragmentation not less, and that ultimately is not good for China,” Georgieva said.
“What I want to see China doing is get serious about reforms, get serious about demand and consumption,” she added.
A number of countries have recently criticized China for what they see as excessive state subsidies for manufacturers, particularly in clean energy sectors, that might flood global markets with cheap goods and threaten competing firms.
US Treasury Secretary Janet Yellen hammered at the theme during a recent trip to China, repeatedly calling on Beijing to shift its economic policy toward stimulating domestic demand.
Chinese officials have acknowledged the risk of overcapacity in some areas, but have largely portrayed the criticism as overblown and hypocritical, coming from countries that are also ramping up clean energy subsidies.
(Updates with additional Georgieva comments from eighth paragraph.)
Article content
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