BANGKOK (REUTERS) - Thailand's finance ministry on Tuesday cut its economic growth forecast for the third time this year due mainly to shrinking exports, a big obstacle to the trade-dependent country regaining traction.
The ministry now expects the economy to grow 3.0 per cent this year, instead of the 3.7 per cent seen three months ago. A year ago, shortly after the military seized power, the ministry forecast 5.0 per cent growth for 2015.
Since then, growth targets for Southeast Asia's second-largest economy have been steadily cut because exports, worth about two-thirds of the economy, have long been weak and domestic demand has not picked up. Growth last year was 0.9 per cent, the lowest since 2011.
Thailand now expects exports to shrink 4.0 per cent this year instead of rising 0.2 per cent, Krisada Chinavicharana, director-general of the Fiscal Policy Office, told a news conference.
"Despite falling exports, clearer public investment in the second half and stronger-than-expected growth in tourism will help drive economic growth to 3 percent this year," he said.
The first June data has confirmed Thailand's economy continues to stumble.
Earlier on Tuesday, the Industry Ministry said factory output in June fell 8 per cent from a year earlier, more than a Reuters poll forecast of 5.15 per cent and the biggest drop since March 2014, before the army took power.
On an annual basis, the output index has fallen every month for two years except in February 2015.
On Monday, the government reported that exports in June fell at the steepest rate in more than three years.
Last month, the central bank cut its 2015 GDP growth estimate to 3.0 per cent from 3.8 per cent, with exports down 1.5 per cent, a third straight year of contraction.
Slow external demand and reliance on shipments of products becoming obsolete have hurt Thai exports. Low commodity prices have cut farmers' purchasing power while record high household debt have restrained domestic spending.
Official second-quarter GDP data will be announced by the state planning agency on Aug. 17.
In January-March, the economy expanded 0.3 per cent on the quarter and 3.0 per cent on the year.
Despite the slowing economy, the central bank's monetary policy committee is expected to keep the benchmark rate unchanged again at 1.5 per cent when it next meets on Aug. 5. It surprisingly cut the rate in March and April to try to lift growth.