Business communities see rebound elusive until 2009
Thursday January 10, 2008

A rebound in economic growth might not be seen until 2009, as political uncertainties and global risks weigh on prospects for export growth and a recovery in domestic demand, according to Dusit Nontanakorn, the vice-chairman of the Thai Chamber of Commerce.

''I don't think that this year will be as good [for the economy] as last year,'' Mr Dusit told the Bangkok Post yesterday.

''Some say that with a new government, we can expect higher confidence and that added fiscal spending will boost demand. But I am more cautious.''

Mr Dusit said current political and policy uncertainties made it ''difficult to expect an economic recovery within the next six months'', but a full rebound may come in 2009 assuming the uncertainties clear up in the second half.

Most economists expect economic growth this year to show only a modest improvement on the projected 4.5% growth shown in 2007.

Pramon Sutivong, the chairman of the Thai Chamber of Commerce, said the external environment looked to be more difficult this year, making it unlikely that Thai exporters could repeat the 17% growth posted in 2007.

Economic trends would depend heavily on domestic politics, he added.

''Investment confidence depends on the government. Not just political stability, but who will hold the key economic ministries,'' Mr Pramon said.

The People Power Party, led by Samak Sundaravej and containing many former members of the disbanded Thai Rak Thai party, won the most seats in pre liminary results in the Dec 23 election.

But the Election Commission is investigating dozens of cases of possible election fraud, and the Supreme Court has accepted a case filed against PPP that could lead to the party's dissolution.

Even if PPP is able to form the government, it remains uncertain who will take up the key economic posts and what role would be given to other coalition partners such as Chart Thai or Puea Pandin. PPP's economic team leader, Mingkwan Sangsuwan, is known for his marketing acumen and has little background in macroeconomics.

Mr Pramon said the uncertainties about PPP's status, the ongoing court challenges and questions of whether Parliament can open would affect business sentiment over the next several months.

''To have a government is certainly better than not. We need to have a leader for the country,'' Mr Pramon said.

Mr Dusit said the Thai Chamber of Commerce would urge the next government, regardless of who it was, to move forward with policies aimed at strengthening investor and consumer confidence and boosting domestic demand.

''Last year, economic growth was led by exports. We need to push investment and domestic demand,'' he said.

''Some 60% of the Thai economy comes from exports. But with the stronger baht, higher oil prices and the US sub-prime mortgage crisis ... the export picture is much more uncertain.''

Mr Dusit said he also wanted to see the new government make a clear commitment toward improving public governance and implement strategies aimed at building sustainable growth.

''The political parties campaigned on promises of populist handouts,'' he said.

''We don't need a government that only gives away money. We aren't a wealthy country. We need a government that can think about how we will build up our revenues and resources.''

Mr Pramon said the dynamic between the armed forces and the government remained another uncertainty.

''Coups, unfortunately, are part of our history. In developed countries, the civilian leader is the clear leader. But in developing countries, the armed forces play a role [in politics],'' he said.

He shrugged. ''The Thai economy is actually not that bad,'' he said. ''But when we say a country is still developing, you also need to consider social and political development. And in these areas, we still have much further to go.''

oh yea mr t flew back to London today also ..........