News Room - Business/Economics

Posted on 09 Apr 2009

Q2 may show growth, says Pridiyathorn (Thailand)

Signs that the global economy is recovering will be led by improvements in China and become more apparent in the second quarter, says M R Pridiyathorn Devakula, a former central bank chief and finance minister.

 

Indications of recovery were being seen in the Chinese economy, along with slight improvements in the United States, he said.

 

"As these are large economies, it should create a positive impact on the economies of Asia, Europe and Japan respectively," he said.

 

"I expect to see global GDP improve in the first quarter, supported by a slight improvement in the Chinese and US economies. Global car sales in February picked up, especially in China, Brazil and Western Europe, together with retail sales. The consumer price index also improved slightly."

 

However, the direction for production and employment was still unclear, he said.

 

M R Pridiyathorn said Chinese retail-, car- and property-sales and new loans in the first two months of the year rose, promoted by domestic consumption. "China has become Asia's economic pillar. All economists are agreed on its clear signs of improvement, so we expect to see better GDP soon."

 

The US economy has also seen better retail sales, improved new-build house sales and reduction in housing supply.

 

These factors indicate that US demand is on the rise, in line with better production utilisation, so the US economy and those of countries that rely on its market will improve, he said.

 

Much depends on the success of the planned US fund to buy out bad loans and revive the financial sector. "Once the new scheme is done, banks' worries will be eased, more loans will be approved and greater cash circulation will boost consumer sentiment," he said.

 

The European economy should follow the US, though negative news in Eastern European countries is prolonging the region's slump.

 

In Japan, which has been in a slump for most of the past 20 years, there were no signs of recovery at all, he said.

 

The Thai economy, where exports contribute 70% of economic growth, will recover in line with China and the US.

 

"We will be in a better position in the next two to six months. The improvement will be slow. We will look to the US economy as we rely on it more than China."

 

Thailand, however, should step up its business activities with China and take the opportunity to grow in line with Chinese expansion, he said.

 

"There is light at the end of the tunnel, but there are certain issues that the government must tackle first to curb current conditions," he said. "It must inject more money to ease unemployment."

 

He also advised the government to focus on boosting agricultural sector incomes and exports, as well as promoting domestic tourism.

 

"The government should boost farming activities and yields, and make use of workforces who return upcountry in a bid to build a more solid foundation for the farm sector to improve our non-accountable gross domestic product."