January 31, 2020 / 7:44 AM / a month ago

UPDATE 2-Thai growth outlook hit by China virus, delayed budget

* C.bank sees big impact on its 2.8% growth outlook this year

* Annual Q4 growth seen lower than Q3’s 2.4% pace - c.bank

* Thailand may lose $3 bln from fewer Chinese tourists - TAT

* Central bank reviews rates next week; some see a cut (Recasts with central bank’s comment)

By Kitiphong Thaichareon and Orathai Sriring

BANGKOK, Jan 31 (Reuters) - Thailand’s economy is expected to grow more slowly than forecast this year after a virus outbreak and a delayed fiscal budget, raising the chances the central bank will cut rates next week.

Both factors will have a “significant impact” on the central bank’s 2020 growth forecast of 2.8%, with the biggest hit in the current quarter, Don Nakornthab, senior director at the Bank of Thailand, told reporters.

The virus outbreak, which originated in the Chinese city of Wuhan, has added to the problems of Thailand’s flagging economy as its exports have been weak amid global trade tensions and investments sluggish.

Annual first-quarter growth earlier projected at more than 2% “will be notably low”, Don said, adding that growth in the final quarter of 2019 was also expected to be less than the previous quarter’s 2.4%.

The central bank’s estimated growth of 2.5% for full-year 2019, a five-year low, will also be missed, Don said.

With new risks, some economists expect the central bank to cut its policy rate when it meets on Wednesday. The central bannk cut the rate twice in 2019, taking it to a record low of 1.25%.

Kobsak Pootrakool, secretary to the council of economic ministers, shared a similar view and said the government’s growth outlook for this year would be reduced.

Kobsak earlier forecast annual fourth-quarter growth of 2.4%-2.5%.

In November, the state planning agency estimated Southeast Asia’s second-largest economy would grow in a range of 2.7%-3.7% in 2020. It is due to give 2019 gross domestic product (GDP) data and new projections on Feb. 17.

“We had expected tourism to drive growth this year, but we have to admit that the sector is facing problems,” Kobsak told reporters after a council meeting.

Tourism, another growth driver, is being hit by China’s ban on group tours as it seeks to halt the spread of the flu-like virus that has led to more than 200 deaths.

China is Thailand’s biggest source of visitors, with about 11 million visits and 544 billion baht ($17.5 billion) in spending last year, both making up 28% of the total.

The Tourism Authority of Thailand on Friday expects a revenue loss of 95 billion baht ($3.05 billion) from fewer Chinese tourists during January-April.

The government will discuss additional economic measures next week, Kobsak said, without giving further details. ($1 = 31.11 baht)

Reporting by Kitiphong Thaichareon Writing by Orathai Sriring Editing by Jacqueline Wong

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