Thai exports are likely to be impacted by less than one per cent by the Greek debt crisis, according to an academic at the University of the Thai Chamber of Commerce.
Only about 0.2-0.4 per cent of Thai exports are at risk of being affected by the Greek debt crisis, said Aat Pisanwanich, director of the Center for International Trade Studies, University of the Thai Chamber of Commerce UTCC. Dr Aat said that the Greek debt crisis has not yet had much impact on Thai exports as the Eurozone countries and the International Monetary Fund IMF agreed to a rescue package of about US$145 billion in loans to prevent the debt crisis from spreading.
If the Greek debt crisis is limited to Greece alone and does not spread to other countries in Europe, only about 0.1 per cent of Thai exports are likely to be affected.But if the crisis spreads to Portugal, about 0.2-0.4 per cent of Thai exports, valued at US$613 million, could be affected and this scenario is most likely to happen, the director said.
Thailand’s 2010 GDP growth is projected at 3.5%, driven by domestic demand. In the context of weaker global demand in 2010, exports will grow modestly, but the restocking cycle and slow rebound in investment also imply a pick-up in imports, which results in muted net external demand. Public and private investment add 0.8% point to the growth rate, while normal stocking patterns provide a boost to growth of 1.5 % points . Thailand’s Household consumption picks up modestly, adding 0.8 percentage point to the growth rate, whereas public consumption decelerates from 2009 levels but still adds 0.4 percentage point. Financial markets have so far been accommodative of the government’s borrowing plans. The expansion of expenditures stemming from the stimulus packages combined with a decline in revenues due to the economic crisis has led to an increase in the fiscal deficit and, consequently, government debt ratios, which have reached 45 percent of GDP in September.
Because Thailand entered the crisis with a relatively strong fiscal position, the cyclical increase in debt levels is not by itself a concern as long as Thailand’s historical fiscal performance is maintained in the future.