BANGKOK, April 5, 2011 – Despite the recent surge in oil prices, Thailand’s economy will continue to expand in 2011 and the pace of economic activity will move closer to that observed before the global financial crisis, the World Bank said in a new report. However, the risks to the outlook have also increased.
In the report, Thailand Economic Monitor April 2011, the World Bank said Thailand’s economic growth has broadened its base, with domestic consumption contributing more to growth than in the recent past and exports holding up well against the uncertain global outlook. Concerns about high prices of food and fuel are likely to persist in 2011, but the Thai economy is expected to weather these rough currents and post a solid performance during the year.
Thailand closed 2010 on a strong note, posting positive growth in the last quarter after two consecutive quarters of contraction. This momentum should continue into 2011.
The World Bank now predicts that Thailand’s gross domestic product would expand 3.7 percent in 2011.
This puts Thailand back on its growth trend after the exceptionally high growth of 2010 and contraction in 2009. It represents an upward revision from the previous estimate of 3.2 percent, based on the improved outlook for advanced economies and the continuation of favorable drivers of domestic demand, especially firm agricultural prices which help boost the income of rural consumers.
Despite this generally favorable assessment, the Bank also believes that risks to the outlook are substantial, citing a number of external factors: the possibility of further oil price increases due to turmoil in the Middle East and North Africa, the follow-on impact on Europe’s debt crisis and the United States’ fragile economic recovery, and the disruption to the auto and electronics industries’ supply chains caused by Japan’s recent earthquake.
The impact of higher oil prices on the Thai economy has been cushioned thus far by the government’s diesel subsidy program and increasing exports of products that also experienced price gains, said Frederico Gil Sander, the World Bank’s Country Economist for Thailand and lead author of Thailand Economic Monitor April 2011. Meanwhile, higher crop prices have helped to increase farm income, boosting overall wages and household consumption accordingly.
However, the World Bank warned that higher food prices could hurt Thailand’s most vulnerable population, those below or just above the poverty line. Also, further hikes in oil prices would eventually hurt everyone.
“Back in 2008, the spike in food prices led to an increase in poverty rates in Thailand for the first time since 1997. This suggests that higher food prices hurt the poorest in society even though many farmers may benefit,”
Mr. Gil Sander said.
“If oil prices continue to increase to new highs, even those farmers who can sell their crops at higher prices may see the income gains reversed since they will face both a higher cost of living but also higher costs of key inputs like fertilizer.”
The Bank recommended a number of short- and long-term measures to help Thailand manage the risks of spiraling food and oil prices in the future. In the short term, replacing oil price subsidies with targeted assistance programs could help re-direct government support and scarce resources toward the neediest households. The pace of interest rate increases, meanwhile, should carefully balance the need to curb inflation with the impact of higher rates on economic activity during what is still an ongoing recovery.
In the long term, improving energy efficiency and reducing dependence on imported energy would help Thailand manage the risk of another oil price shock, the report said. Further, as the world population continues to grow and the impact of climate change threatens global food security, investing to improve the reliability of food production could help Thailand respond to another food crisis more effectively.
“Making agriculture more climate-resilient is key to improving agricultural productivity,” Mr. Gil Sander said. “This is the second time in three years that the world is experiencing a sharp increase in food prices, which suggests that the phenomenon is not temporary. Global demand for agricultural commodities will continue to increase. You want to be able to produce more food and do it more reliably to reduce your vulnerability to higher food prices.”
Thailand Economic Monitor is a semi-annual publication by the World Bank.
The report will be available for free download in mid-April at www.worldbank.org/th/econmonitor
Permanent URL for this page: http://go.worldbank.org/HQ4YXE0OP0
Thai fruit exports to FTA markets up 107 percent
China, Malaysia, Singapore, Indonesia, the Philippines, Hong Kong, Australia and Chile are top importers of Thai fruits, especially fresh durian, mangosteen, longan and mango. Thai exporters are able to benefit from FTA privileges.
BANGKOK (NNT) – Thailand’s fruit exports continue to increase, despite the sluggish global economy caused by the COVID-19 pandemic, with key trade partners being countries that have free trade agreements (FTAs) with the kingdom.
The Future of Asia: greener but with a public and private debt hangover
The COVID-19 pandemic has been a perfect storm, destroying jobs, worsening poverty and inequality, and creating a public and private debt problem—especially for countries and firms already in fragile financial health beforehand
50:50 campaign may not get immediate extension
BANGKOK (NNT) – The government’s 50:50 co-pay campaign expiring on 31st March may not be getting an immediate campaign extension. The Minister of Finance says campaign evaluation is needed to improve future campaigns.
The Minister of Finance Arkhom Termpittayapaisith today announced the government may not be able to reach a conclusion on the extension of the 50:50 co-pay campaign in time for the current 31st March campaign end date, as evaluations are needed to better improve the campaign.
Originally introduced last year, the 50:50 campaign is a financial aid campaign for people impacted by the COVID-19 pandemic, in which the government subsidizes up to half the price of purchases at participating stores, with a daily cap on the subsidy amount of 150 baht, and a 3,500 baht per person subsidy limit over the entire campaign.
The campaign has already been extended once, with the current end date set for 31st March.
The Finance Minister said that payout campaigns for the general public are still valid in this period, allowing time for the 50:50 campaign to be assessed, and to address reports of fraud at some participating stores.
The Fiscal Police Office Director General and the Ministry of Finance Spokesperson Kulaya Tantitemit, said today that a bigger quota could be offered in Phase 3 of the 50:50 campaign beyond the 15 million people enrolled in the first two phases, while existing participants will need to confirm their identity if they want to participate in Phase 3, without the need to fill out the registration form.
Mrs Kulaya said the campaign will still be funded by emergency loan credit allocated for pandemic compensation, which still has about 200 billion baht available as of today.
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