3 reasons why Thailand's growth economic forecast dropped to 3.7%

Plagued by delay in investment plans.

According to Morgan Stanley, it is downgrading its 2013/2014 GDP growth numbers from 4.7%YoY/5.3%YoY to 3.7%YoY/4.4%YoY.

Morgan Stanley's first stab at 2015 looks for further growth pickup to 4.8%YoY. August consensus for 2013/2014 stands at 4.3%YoY/4.9%YoY respectively.

Morgan Stanley cited three reasons.

Here's more:

Our downgrade takes into account the following: (a) the technical recession in 1H13 as payback from stimulus program was more significant than expected; (b) delay in implementation of government investment plans from 2H13 to 2014; (c) exogenous tightening effects as overeasy monetary policy in US starts to unwind.

Post flood in 2012, domestic demand and export momentum has diverged as export production capacity got crimped and domestic demand got a boost from stimulus program.

Meanwhile, 2013 saw a pullback in domestic demand as stimulus program expired whilst goods export momentum stayed patchy at a more subdued level.

Heading in 2014, we suspect domestic demand momentum (+4.1%YoY) and export momentum (+4.1%YoY) are likely to converge.

Both are likely to show a cyclical uptick.

However, the pace of acceleration will likely be more marked in exports as exogenous tightening inflicted by the unwinding of overeasy monetary policy in US puts a rein on how quickly domestic demand would pick up.

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