News Room - Business/Economics

Posted on 10 Nov 2008

Thailand could achieve only 3.3% GDP growth in 2009

Next year's growth in the gross domestic product (GDP) could hit only 3.3 per cent, Phatra Securities chairman Banyong Phongpanich said yesterday.

 

His forecast falls far short of the central bank's 3.8-4.5 per cent but matches the DBS Group's 3.3 per cent.

 

The most worrisome factors are domestic politics and a worsening economy in the event of no political compromise, Banyong said.

 

Lower inflation, however, would offer more flexibility for each country to follow a looser monetary policy, he said.

 

The global economic slowdown will be less serious than expected, because governments worldwide understand the problem and have already taken economic-stimulus steps to cushion against the financial fallout, Banyong said.

 

Thailand is one country in a strong financial position, as evidenced by its modest current-account deficit and low external debt, Banyong told a seminar entitled "Eyeing the Crisis and Exploring Opportunities".

 

Short-term debt here has reached only 20 per cent of international reserves versus 70 per cent for the US and the EU and 130 per cent for Japan.

 

The country's weak points are overreliance on exports for 70 per cent of GDP and underinvestment at 20-24 per cent of GDP in the past five to six years.

 

Federation of Thai Industries chairman Santi Vilassakdanont said export orders had already fallen off 30 per cent this quarter, due to the global financial debacle.

 

The US, Europe and Japan accounts for 60-70 per cent of Thailand's exports, and the real sector will feel the strain when the economies of these customers lose steam, he said.

 

"Even though exports will feel the heat, small and medium-sized enterprises (SMEs) are more concerned, because they have less financial stability, and borrowing will be more difficult," Santi said.

 

Local political instability is another factor undermining consumer confidence.