Thai Government Predicts Dismal Economic Forecast for 2009

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The following appears in the PATTAYA DAILY NEWS:

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GOVERNMENT PREDICTS GLOOMY ECONOMIC OUTLOOK FOR THAILAND IN 2009

 

Acting Finance Minister, Suchart Thada-Thamrongvech, on December 8, admitted to being seriously concerned that the country‘s economic problems will intensify in Q1,2009.

 

"The economy has begun to signal its worsening because policies drawn up to address the problem cannot function properly and state agencies need to wait for a new policy from the next government," Mr. Suchart is reported to have said.

 

The fact that the mid-year budget of Bt100 billion must be suspended pending consideration and approval by the next government, hardly helps matters. However, Mr. Suchart did express satisfaction over the Bank of Thailand (BoT) Monetary Policy Committee's decision to reduce the policy interest rate sharply because it would encourage financial institutions to reallocate their assets in more promising avenues of investment; however, he said that a further cut in interest rate would be encouraging.

 

Further predictions

 

· The economy is likely to weaken more in 2009, in line with a further slowdown in the global economy, with Gross Domestic Product (GDP) growth forecast to fall to 3.9%. "We have to revise the growth projection down because the global economic slowdown is affecting our economy," said the National Economic and Social Development Board's Secretary General, Ampon Kittiampol.

 

· "Net exports are falling and local political turmoil is seriously deterring investment and tourism," Ampon Kittiampo said.

 

· The pace of export revenue growth will slow in 2008-09, while import demand is likely to improve. Exports suffered during the recent PAD blockade of Suvarnabhumi Airport, which was a huge blow to Thailand's tourist industry that brings in the equivalent of about 7 % of GDP. Losses were estimated to cost 1 billion baht ($28m) a day to the tourist industry.

 

· "The world economic recession will have a strong effect on the Thai export sector in first half of the next year and private investment will continue to slow down," Ampon predicted.

 

· Despite the best efforts of the central bank, Thailand will almost certainly fall into recession in 2009 and although the Bank of Thailand recently cut its policy rate cut to 2.75%, this is deemed by most economic pundits as insufficient to prevent the economy weakening further

 

· Thai industry expanded at 6.1 percent, down from 7.7 percent in the second quarter and 9.5 percent in the first quarter, and Ampon warned that the global financial crisis would continue taking its toll in Thailand.

 

· The National Economic and Social Development Board projected that the Thai economy would grow at 3-4% in 2009, while inflation is expected to drop to between 2.5 and 3.5 percent.

 

· Thailand's unemployment rate is expected to rise to at least 2.0-2.5% in 2009, up from the 1.5-2.5% projected in November and the 1.4% estimated for 2008, the state planning agency said on December 8.

 

· Unemployed Thais would average 900,000 in 2009 out of a national labour force of 37.6 million, up from 530,000 in the first nine months of 2008, an official at the National Economic and Social Development Board (NESDB) recently stated.

 

'This is the impact of the growing global economic and financial crisis that affects Thailand,' according to NESDB Deputy Secretary General Suwanee Kamman. She continued by saying that the unemployment rate next year could be even higher than her new forecast as it did not take into account the effect on the tourist industry of the week-long blockade of Bangkok's airports by PAD protesters.