Posted on 28 Feb 2013
This year's economic growth projection looks set to improve as the central bank may revise up its 4.9% figure in line with the improving local and regional economies, says governor Prasarn Trairatvorakul.
The National Economic and Social Development Board announced gross domestic product (GDP) grew by 6.4% last year, beating the Bank of Thailand's projection of 5.9%, on the back of higher domestic investment and consumption.
Exports are expected to recover gradually after taking a hit from the weak global economy, said Mr Prasarn.
Several research houses have already revised up their 2013 growth projections to 5% or more. "The GDP adjustment may be considered at the Monetary Policy Committee's April meeting," Mr Prasarn said following Tuesday's "SCB Investment Symposium Thailand Outlook 2013" hosted by Siam Commercial Bank.
He said the strong Asian economy led by China and positive domestic economic momentum will continue to support Thai economic growth.
The US economy is also showing signs of a recovery despite the fragile situation in the euro zone, a scenario that is expected to see foreign capital inflows into the Thai market continue albeit at a slower pace.
Mr Prasarn said foreign capital inflows have been slowing after last month due partly to the "January effect".
The January effect is a calendar-related market anomaly in which financial security prices increase during that month, creating an opportunity for investors to buy stock at lower prices before January and sell them after their value increases.
Last month saw US$2 billion in net foreign capital inflows, an insignificant amount compared with January 2012. However, it has decelerated this month, particularly for Thai short-term bonds.
Year-to-date, foreign investors have recorded net buying of 83 billion baht in the Thai bond market.
The proportion of foreign investment in the local bond market is 11.6%, up from 5% in the past but still small compared with 30-40% in Malaysia and Indonesia, said Mr Prasarn.
He said the small proportion means foreign divestment will not affect the local bond market.
"Foreign investment in Thai bonds is slowing and shifting to the local stock and property markets for their higher returns. The central bank is closely monitoring the situation along with the country's macroeconomy," said Mr Prasarn.
In the property market, local condominium prices grew by 8% year-on-year in the third quarter, almost doubling to 15% in the fourth quarter.
Mr Prasarn said this was due to stronger purchasing power, the higher daily minimum wage and greater urbanisation.
