The Thai economy is expected to grow around 6-7 per cent this year, given improvements in many economic indicators in April and May, according to a leading economist.
Siam Commercial Bank Executive Vice President and Chief Economist Dr Sethaput Suthiwart-Narueput predicted the country’s gross domestic product (GDP) in the second quarter would expand at least 7 per cent since many economic indicators in April and May picked up and exports in June surged by 40 per cent from the same month last year.
Given these factors, he sees the GDP during the first half of this year growing around 10 per cent year-on-year.
Dr Sethaput said production in the industrial sector is considered a key drive for Thai economic growth at present. The country’s main exports, which are growing satisfactorily now, are industrial products such as vehicles, electronics, electrical appliances, and machinery.
Only will the industrial sector growth contribute to the GDP growth of almost 6 per cent in second quarter of this year, he said.
He allowed some segments of the service sector including hotels and restaurants would be negatively affected by the decreased number of tourists. But other segments including transport and trade would continue expanding due to the recovery of exports and domestic consumption.
Since economic recovery in the first half of this year had been driven by improved industrial production and increased exports, he said, economic growth is likely to ease in the second half of the year in tandem with an expected slowdown of the global economy due to economic fragility in the United States, the debt crisis in Europe, and Beijing’s efforts to reduce China’s economic heating.
The government’s second phase economic stimulus measures under “Thai Khem Khang” or “Stronger Thai 2012” project will help boost the country’s annual economic growth of 1-2.5 per cent during 2010-2012, according to a leading securities analyst.
However, implementation of the measures will raise the public debt to 60 per cent of the gross domestic product (GDP) in 2012, according to Sukit Udomsiri, first executive vice president of Siam City Research Institute, at a special panel discussion on the economic and financial situation
He predicted the planned issuance of the government bonds to absorb the market liquidity would not adversely affect the overall liquidity in the system.
But liquidity is quite likely to tighten next year as the demand for investment funds by the private sector is set to increase as a result of recover in the global economy.
Under the circumstances, he said, the interest rate might to increase next year.
Mr. Sukit believed the Thai economy next year would not be worse than this year as the global economy is forecast to is forecast to enjoy the V-shape turnaround in 2011.