Central bank, Korn forecast steady growth
  • Published: 7/01/2011 at 03:23 PM
  • Online news: Local News
The Thai economy would grow substantially this year despite a slowing in foreign capital inflow, thanks to growing domestic demand for goods and services, Bank of Thailand governor Prasarn Trairatvorakul said on Friday.

Central bank governor Prasarn Trairatvorakul

“The money market is now very sensitive to negative reports as there is no clear sign of economic recovery in the US and European countries.

"This led to a fluctuation in major global currencies. Thailand has to closely follow the situation,” Mr Prasarn said.

The BoT chief believed the fluctuation of major currencies would have minimal impact on Thailand and that the country would be able to overcome the problems of global economic recession and the financial crisis in Europe.

The meeting of economic related ministries and agencies yesterday agreed that it is necessary for the government to invest in infrastructure development mega-projects to strengthen the competitiveness of the country.

It was also agreed that a deficit budget is needed for the 2012 fiscal year, he said.

Finance Minister Korn Chatikavanij said the domestic economy is expected to grow by about four per cent this year, after eight per cent growth last year.

Mr Korn projected that the inflation rate in 2011 would be around three per cent, under pressure from the global oil price, but this was not too high.

Asked about the government’s Pracha Wiwat (People's Agenda) programme, the minister said it is intended to settle the problems that are obstacles of the government’s efforts to increase the country’s competitiveness.

Finance Minister Korn Chatikavanij

“It is also about improving the quality of life of the people. A budget of no more than two billion baht will be needed to finance this programme,” he said.

The prime minister is expected to explain the programme to the general public this Sunday.

Mr Korn said tax cuts might be considered if global oil prices continue rising.

The ministry would be flexible about adjusting the oil tax structure, because of the soaring global fuel prices.

Previously, the minister was tentative about cutting excise tax on oil to deal with the problem of fuel prices.

"The Finance Ministry also has a plan to adjust the automobile tax structure, so it would be in line with the government's strategy to promote alternative energy consumption," he said.

Meanwhile, the Commerce Ministry's vegetable oil price sub-committee today approved the proposal to raise the retail price of palm cooking oil to 47 baht for a one litre bottle from 38 baht, a hike of almost 24 per cent..

The price increase will be effective tomorrow.

Palm oil manufacturers earlier proposed the government to consider raising the retail price by eight to 10 baht a bottle to address the current shortage on the shelves.

Commerce Minister Porntiva Nakasai

The Palm Oil Policy Committee, chaired by Deputy Prime Minister Suthep Thaugsuban, yesterday endorsed a plan to import 30,000 tonnes of raw palm oil from Malaysia this month.

Commerce Minister Porntiva Nakasai said her ministry has set the rice export target for 2011 at between nine and 9.5 million tonnes, with a total estimated value of US$5.3-5.6 billion.

A total of 9.03 million tonnes of rice, worth $5.3 billion, were exported last year, a substantial increase from 2009 on the back of strong global demand, Mrs Porntiva said.