Fast Market Research recommends "Thailand Business Forecast Report Q2 2013" from Business Monitor International, now available

Boston, MA -- (SBWire) -- 06/14/2013 --Core Views

Despite prevailing global economic headwinds and a strengthening Thai baht that is increasingly undermining the competitiveness of the export sector, Thailand's economy is proving to be much more resilient than we had initially expected. We maintain our view that structural problems in China will resurface towards the end of the year and this will again weigh on external demand across the region. Accordingly, we maintain our forecast for Thailand's real GDP growth to fall to 4.0% in 2013.

We believe that the Bank of Thailand (BoT) will keep its policy rate on hold at 2.75% throughout 2013. Unless we see an uptick in core consumer price inflation over the coming months - which is currently stable at 1.6% year-on-year (y-o-y) and well within the BoT's target range of 0.5-3.0% - we see limited scope for a surprise rate hike.

Thailand's fiscal position is poised to deteriorate further deterioration in the near term. We caution against the government's decision to undertake aggressive infrastructure spending projects given Thailand's deteriorating fiscal position. We are forecasting a budget deficit of around 3.2% of GDP in 2013, up slightly from a projected 3.0% in 2012.

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Major Forecast Changes

We have revised our forecast for the Thai baht to remain relatively stable throughout 2013. Our view that policymakers will aim to run small current account surpluses rather than deficits over the coming years, will place the Thai baht on a mild appreciatory path over the longer term. Accordingly, we forecast the Thai baht to average around THB30.09/US$ in 2013 before appreciating slightly towards THB29.30/US$ by the end of 2014.

Key Risks To Outlook

Downside Growth Risks From Deteriorating Fiscal Position:

In the event of a substantial decline in rice prices over the coming months, we could see the government suffering massive losses as a result of its rice policy. This could weigh on the government's ability to finance large-scale investment projects, resulting in project delays and putting downward pressure on economic growth.

Upside Long-Term Growth Risks From Political Reconciliation:

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