The Thai economy this year is likely to rise 5.5 per cent with a projected range of 5.0-6.0 year-on-year, higher than projected in March when it was seen at 4.5 per cent year-on-year, Fiscal Policy Office director-general Sathit Rangkasiri said.
Factors that supported Thai economy in the first quarter of this year expanded 12 per cent. The recovery of the global economy, particularly Thailand’s new trade partner countries in Asia, also helped increase exports so far this year.
This year’s domestic spending — including private consumption and investment –are likely to recover from last year, Mr Sathit said.
Finance Ministry spokesman Ekniti Nitithanprapas said that exports and service volume in 2010 was projected to grow by 11.9 per cent due to the higher-than-expected economic recovery of trading partners.
Domestic spending in 2010 is likely to improve from last year. Private consumption, which contracted by 1.1 per cent last year, is expected to increase by 3.6 per cent this year despite the recent political turmoil due to better employment, higher farmer incomes and the government’s farmer income guarantee measures.
Government spending has played an important role in supporting the Thai economy this year.
Thanawat Polwichai, director of the Economic and Business Forecasting Centre at the University of the Thai Chamber of Commerce (UTCC), said a survey of economic expansion in quarter 1 (Jan-Mar) of 2010 suggested the Thai economy has rebounded nationwide in light of the global economic recovery, which has boosted the Thai exports.
Basing on the UTCC latest survey, in quarter 1 the GDP growth in the Northeast is estimated at 9.2 percent, with 8.6 percent in the North, 9.1 percent in the South, 16 percent in Central, and 11. 1 percent in Bangkok and its vicinity. The regional expansion would boost the national GDP to grow by 12 percent in the first quarter.
With a well-developed infrastructure, a free-enterprise economy, generally pro-investment policies, and strong export industries, Thailand enjoyed solid growth from 2000 to 2008. In 2009, Thailand’s economy contracted about 2.7% . Implementation of the Thai Kem Kaeng program could have important long-term implications if it sets an example for greater efficiency and transparency in government investments. Future tranches of Thai Kem Kaeng program should put a greater emphasis on investments in economic “software” (skills, regulations), in addition to economic “hardware” (infrastructure). Financial markets have so far been accommodative of the Thai government’s borrowing plans. The burst of the commodity bubble of mid-2008 coupled with subdued levels of economic activity have led to price deflation for most of 2009.
The political unrest in the last quarter of 2009 will continue to dampen tourist confidence into at least the first half of 2010. In addition, the slowdown in growth of the economies from which a large number of tourists come to Thailand, such as EU and Japan, will reduce tourist receipts next year. With the slowdown in exports capacity utilization is expected to fall in Thailand. A clear exit strategy from the fiscal stimulus has yet to be articulated. Because part of the government’s capital budget has been moved off-budget as part of the stimulus package, some additional capital expenditures, as well as the maintenance expenditures of the newly-built infrastructure, must be incorporated into future budgets once the stimulus package is finalized.