The Bank of Thailand (BOT) has issued a stern warning that the growth of exports, the major driving force in the country's economy for several decades, next year will be only 7 per cent in the worst-case scenario amid the looming global economic recession.
The Securities Analysts Association (SAA) has trimmed its Stock Exchange of Thailand (SET) Index target's consensus this year from 828 points in the previous poll to 611 to reflect the lingering local political tension coupled with the global financial woes.
The Bank of Thailand (BOT) revised downwards its economic growth projection by 50-75 basis points to 4.3-5 this year and 3.8-5 next year, because of political turmoil and the global financial crisis.
The worst-case forecast is based on an assumption that the economies of trading partners slip into recession, the BOT said.
Although the world economy is expected to bottom out in next year's first quarter, it could be in the doldrums for a certain period in either a U or an L shape.
"There is a lot of uncertainty amid escalating risk, as the global economy could recover in the second quarter or anytime next year, which we must keep a close eye on," said Duangmanee Vongpradhip, the bank's assistant governor.
BOT Governor Tarisa Watanagase said the public sector should restore confidence to build up domestic demand before the global financial turmoil affected exports and tourism.
The central bank estimates export growth will be 7-10 per cent next year, down from its previous forecast of 12.5-15.5 per cent. It is expected to expand 20-23 per cent this year.
This is in a "base case" scenario in which the growth of trading partners is 4.1 per cent next year - 1 per cent growth in the US economy, 0.9 per cent in the euro zone, 0.8 per cent in Japan and 6.1 per cent in Asia.
In the worst-case scenario, the global economy will expand only 1.2 per cent next year, down from 4.1 per cent this year.
Tarisa is optimistic the world's financial crisis will affect the Kingdom's economy only gradually. Private-consumption growth continues, although asset prices in stock and property markets have fallen. A low unemployment rate helps maintain consumption.
The BOT has, however, revised its estimates for consumption growth downwards, projecting private consumption growth of 2.5-3.5 per cent this year and 3.5-4.5 per cent next year. Private investment will expand 4-5 per cent this year and 5-6 per cent next year, it says.
The central bank said the government's budget disbursement could be lower than the expected 94 per cent, but it did not forecast how the disbursement would drop given a dissolution of the House.
SAA secretary-general Sombat Narawutthichai on Thursday said his agency's latest poll surveyed 21 brokers, 43 per cent of whom were revising their SET Index estimates for their stock investments in the fourth quarter.
The SET Index is expected to be 413 points this year, he said.
"Most of the surveyed analysts have adjusted their estimates on key indicators to comply with the current situation, but they maintain their projections of economic growth this year at 5 per cent," he said.
Under the latest consensus, earnings-per-share growth of listed companies has been slashed from 6.6 per cent to 2.3 per cent.
The SAA consensus also cuts the SET Index target for next year from 896 points to 671, based on an assumption that the index will move between a maximum of 800 points and a minimum 391 points.
The country's 2009 gross domestic product growth estimate has been cut to 4 per cent, from 4.9 per cent before.