BANGKOK (REUTERS) – Thailand’s finance ministry on Wednesday (Jan 29) cut its 2020 economic growth forecast to 2.8 per cent from the 3.3 per cent projected three months ago, citing weaker exports, a delayed budget and the spread of a new virus from China.

The ministry slashed its estimate for 2020 exports, a key growth driver, to a rise of just 1 per cent from an earlier 2.6 per cent increase, Mr Lavaron Sangsnit, the head of the finance ministry’s fiscal policy office, told a news conference.

“Despite the downgrades, the economy is still growing,” he said. “The major drivers will be private investment and large public investment projects”.

The ministry estimated the economy grew 2.5 per cent last year, the weakest pace in five years, after expanding 4.1 per cent in 2018. Official 2019 gross domestic product (GDP) data is due on Feb 17.

South-east Asia’s second-largest economy is heavily reliant on exports, which have been hurt by US-China trade tensions and sluggish global demand.

Tourism, another key driver, is being affected by China’s ban on all group tours because of the virus.

The Tourism Authority of Thailand on Tuesday expected the number of Chinese tourists, Thailand’s biggest source of visitors, to fall by two¬†million this year from last year’s 11 million.

However, the finance ministry expects overall foreign tourist numbers to drop by 400,000 to 41.1 million this year, hoping other countries will help make up for the lack of Chinese visitors, Mr Lavaron said. As for the budget, delays in the plan for the current fiscal year will affect only new government investment projects, while others can still proceed with the bidding process, Mr Lavaron said.

“There will no disruption or government shutdown,” he said.

The 3.2 trillion baht (S$140.5 billion) budget, which was supposed to start on Oct 1, is waiting for a court ruling on the validity of the budget bill.