Reconstruction of flood-damaged areas and substantial policy stimulus will drive a rebound in Thailand’s economic growth in 2012, said the Asian Development Bank (ADB). The ADB projected Thai economy to recover from last year’s marginal 0.1 per cent to 5.5 per cent this year, said Dr Luxmon Attapich, the ADB’s senior economist.

Thailand’s economic growth of 5.5 per cent was revised from the institution’s earlier projection of 4.5 per cent.

The anticipated rebound in growth this year depends on the government reconstructing flood-damaged infrastructure and making a significant start on long-term projects involving flood-prevention and water management. It is reflected in improvement of economic figures in January and February, particularly confidence among consumers and businesspeople.

Higher than projected global oil prices are also a downside risk. Flooding and drought are a perennial threat.

Private consumption growth was underpinned by civil service salary increases in January and a 40 per cent boost in the minimum wage in April. The government has also introduced incentives for first-time buyers of houses (tax breaks) and automobiles (cash rebates). Inflation is forecast to average 3.4 per cent in 2012 and 3.3 per cent in 2013.

Ms Luxmon said risks to the outlook include a deeper than assumed recession in the eurozone – the market for nearly 10 per cent of Thai exports and source of about 27 per cent of its tourists.

Higher than projected global oil prices are also a downside risk. Flooding and drought are a perennial threat.

“Thailand’s ability to restore confidence among investors still depends on upgrading infrastructure to handle with possible floods and reviving industrial plants as well as implementing long-term comprehensive water management. These are urgent issues to help boost Thai economy in these two years,”

the ADB senior economist said.  (MCOT online news) Read More

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