The Director-General of the
Fiscal Policy Office, Somchai Sujjapongse, stated that the Thai economy in 2013
is expected to grow by at least 3.5 percent.
However, it is likely to
expand by 4 percent, if the public sector accelerates budget disbursement in
the first quarter of the 2014 fiscal year,
as planned. The 2014 fiscal year
begins in October 2013.
Since the growth of the
Thai economy in the first half of 2013 decelerated, the overall economy for the
whole year would slow down, particularly because of a decline in private sector
spending. Investment in the public sector remains a major factor contributing
to Thailand’s economic growth in the second half. Export growth is likely to
accelerate, while tourist arrivals are expected to continue to grow. Inflation
would stand at 2.3 percent.
The Fiscal Policy Office
believed that the Thai economy in 2014 would expand by 5.1 percent. The
recovery of Thailand’s major trading partners would contribute to Thai exports.
The low interest rate would also encourage private sector consumption and
investment. Inflation in 2014 is expected to be 2.8 percent.
Meanwhile, Governor of the
Bank of Thailand Prasarn Trairatvorakul stated that, like the rest of emerging
Asia, the Thai economy appears to be softening in the near-term. On top of an
export recovery that could be more delayed, the vital contribution from
domestic spending is also viewed as lessening. Part of this reflects a natural
reversion to a more normal pace of growth following unusually strong growth in
2012. More specifically, he said, the boost from the first-car scheme
dissipated sooner than expected. Household debt, which has risen fast and is
now in the ballpark of 80 percent of GDP, has started to weigh visibly on
durable and semi-durable purchases. And businesses also seem to be postponing
investment as they await better economic conditions at home and abroad. In
light of these factors, the Bank of Thailand projected GDP growth to be around
4 percent in 2013.
Mr. Prasarn pointed out
that this growth rate is reasonable amid a weak external environment, coupled
with the fact that consumption has become somewhat over-stimulated already.
Looking ahead, fundamentals of the economy remain sound overall. Monetary and
fiscal conditions will continue to be supportive. And despite some delay, the
contribution from exports is also bound to improve as the global economy gains
a firmer footing.
Through this turbulent
time, he said, the Bank of Thailand has been steering its monetary and
financial policies with prudence. The flexible inflation-targeting framework
succeeds in anchoring inflation expectations, thus fostering continued growth
and stability. The managed float regime accommodates baht movements that are in
alignment with fundamentals, with policy instruments ready to curb excessive
speculation and overshooting if needed. The strong international reserves
position, at the same time, helps cushion against sharp flow reversals.
(thailand.prd.go.th)