November 15, 2006 Wednesday

fnWEB - Bangkok - November 15, 2006 - The Thai economy is expected to grow 4.6 per cent next year, bolstered by the governments spending and private investment, according to the World Bank.
Kirida Paopichit, the World Banks economist in Southeast Asia, projected Thailands gross domestic product this year would expand 4.5 per cent, boosted by a rather significant increase in exports.
The local demand had declined considerably due to an increase in fuel prices, inflation rates and interest rates, as well as political uncertainties.
These factors had dampened investor confidence and state and private investment in 2006.
Next year, she said, WB forecast the countrys GDP would grow 4.6 per cent.
Although the exports would neither grow nor help boost the economy like that of this year, the economic growth would be driven by the state and private investment.
However, there remain many negative factors to the Thai economy including global economic slowdown, hefty fuel prices, and a lack of confidence in the governments policy.
"It is expected Thailand will experience a trade deficit of around US$4 billion baht next year compared with around $1.6 billion this year," Mrs. Kirida said.
She estimated the exports next year would grow 11 per cent while an expected inflation decline would encourage household consumption and the budget would be disbursed as planned.
The projected export decline resulted from hefty oil prices, higher actual interest rates, stronger baht, governments policy uncertainties, and slowdown in the global demand.
Simultaneously, the generalised system of preference (GSP) Thailand had obtained from the United States is due to expire.
It would increase the export product price by around 1-3 per cent. This, together with the stronger baht, will affect the overall exports.
The private investment next year is expected to be outpaced by that of this year because the industrial output is projected to decline along with the export slowdown.
She said the Commerce Ministrys move to control product prices would make the entrepreneurs earn smaller profits.
Mrs. Kirida said WP expected the state investment would accelerate, but a budget disbursement for mega-projects would be in delay.
However, she believed the state investment would help stimulate the economy since the budget for the 2550 fiscal year would be disbursed throughout the year.
Meanwhile, the private investment is unlikely to expand significantly next year due to an increase in actual interest rates and real exchange rates.