News Room - Business/Economics

Posted on 26 Feb 2008

Thailand’s economic forecasts brighter

Q4 2007 growth a surprising 5.7% 

The National Economic and Social Development Board (NESBD) yesterday revised upward its growth forecast for 2008 on expectations of a surge in exports and private investment.

The economy is expected to grow between 4.5% and 5.5% this year, higher than the agency's last estimate in December of 4-5%, said Ampon Kittiampon, the NESDB secretary general.Thailand posted 5.7% growth in the fourth quarter of last year, much higher than 4.4% in the third quarter, 4.3% in the second and 4.2% in the first quarter. Whole-year growth was 4.8%.

Last year's economic growth was powered by exports, which rose 18.1% in US dollar terms.

The baht has been trading at 10-year highs against the dollar, but the NESDB predicted that exports would continue to grow by 12% this year.

According to the government think-tank, January's record export growth reflected sound prospects for this year.

Shipments overseas rose 33% in January from a year earlier to $13.96 billion, while imports surged 49% to $14.61 billion, compared with an 8.8% rise in the previous month.

The country recorded a $653.3-million trade deficit for the first month of the year, compared with a surplus of $1.2 billion in December.

Imports surged mainly because of a $532-million oil rig order and $239 million spent on aircraft. Oil and raw material imports also jumped as local consumption and investment picked up.

Inflation is also expected to rise this year, reaching 3.2-3.7%, against 2.3% last year, because of ongoing pressure from rising oil prices and higher consumer product prices, he said.

The average Dubai crude price was projected at US$80-85 per barrel, up from $75-80 in the previous year.

Mr Ampon said the positive outlook was helped by a slate of investment plans already approved by the Board of Investment (BoI), including new developments in petrochemicals, automaking and automotive parts, and electronics.

Despite fears of a slowdown in the US, growth in exports to China and new markets in Eastern Europe should help cushion any downturn, he said.

''Thailand's economy is likely to show more sustained growth, although there are concerns about high oil prices, rising prices for consumer goods and a slowdown in the global economy,'' he said.

''Those factors will affect the economy less if the government carries out its policies with proper financial and monetary measures, while making the private sector feel confident in the economy.''

The stronger-than-expected growth figures helped push Thai stocks up 1.44% yesterday. The Stock Exchange of Thailand index closed at 838.74 points, up 11.88, in trade worth 16.52 billion baht.

Supakorn Sujiratanawimol, an executive vice-president of KTBS Securities, said the improved economic figures helped boost sentiment for the day.

But she noted that trading volume remained light, and that the direction of the US economy would play a larger role on the SET over the next few weeks.

The overall market would remain volatile so long as foreign investor confidence in the global economy remained uncertain, Ms Supakorn said.

Kitti Hamnilrat, a senior vice-president of Ayudhya Securities, agreed that the US economic slowdown and sub-prime mortgage crisis would continue to weigh on global markets for some time.