Thailand is still able to
maintain economic stability despite impacts of political protests on the
country’s economic growth.
Governor of the Bank of Thailand
Prasarn Trairatvorakul believed that sound economic fundamentals would enable
the country to cope with volatility in global financial markets.
He cited four major factors as
Thailand’s “immunity” that protected it from negative effects. First, the
country has no problems of economic imbalance, such as high inflation or
continuing current account deficit. Second, Thailand is able to maintain the
flexibility of its currency and the stability of capital inflows and outflows.
Third, Thailand’s reserves are at a high level; it currently represents 50
percent of GDP. Fourth, the private sector, especially commercial banks,
remains financially strong, so the stability of financial institutions will
facilitate economic liquidity.
However, Mr. Prasarn said that
if the ongoing political situation was prolonged, the country’s immunity would
weaken and disadvantages would be seen in higher production costs of various
economic activities. The potential for competitiveness would also become a
matter of concern.
He stressed the need for
effective risk management and efforts to create confidence among traders and investors.
He believed that every crisis offers an opportunity for consultations to seek
solutions that would be favorable to the country’s economic growth in the long
run. More importantly, Mr. Prasarn said, Thailand needs collective efforts to
move the country forward. The private sector should play a leading role in
bringing up important issues for a new government, which would work to drive
the country’s economy and create mechanisms for good governance.
The Bank of Thailand estimated
that the Thai economy would grow by only 3 percent in 2014, instead of 4
percent as predicted earlier. The country’s investment continues to grow and
the Thai baht remains stable. The recovery of the world economy and Thailand’s
political conflicts should be a focus of attention, as they are important
factors for Thailand’s economic growth.
Mr. Prasarn pointed out that the
Thai economy was also pressured by external factors, especially those
concerning emerging markets. As for the problem of the rice pledging scheme,
many farmers have not yet been paid for their rice and they suffer from a lack
of savings. In this regard, he urged the caretaker government to speed up rice
sales from the stockpiles to get money to pay for farmers, instead of borrowing
from financial institutions.
Meanwhile, Permanent Secretary
for Commerce Srirat Rastapana said that Thai exports in 2014 are likely to grow
by 5 percent, compared with an export contraction in 2013. As for worries that
the political situation might affect exports, she said that agencies concerned
would assess the situation and set the country’s export target in March 2014.
(thailand.prd.go.th)