http://www.bangkokpost.com/business/...-despite-risks

PM: Economy to grow despite risks
  • Published: 27/10/2010 at 03:47 PM
  • Online news: Economics

The Thai economy should continue to grow over the next year despite many negative factors, Prime Minister Abhisit Vejjajiva said on Wednesday.

"There are risk factors such as the global economy, the currency exchange rate, natural disasters and politics but it is important that the government can clarify the situation and the factors to ensure economic growth next year, even if it does experience a slowdown," Mr Abhisit said at a seminar on the government's handling of economic risk factors.

On the global economy, he said the economic situation in the United States, Japan and Europe must be closely monitored.

"Some countries have been trying to stimulate their economies by tackling unemployment, but they are constrained by high public debt.

"If there's too much stimulation it could create financial and monetary problems," he said.

As for the capital inflow and outflow and the baht's appreciation, he said as long as the US continues its domestic economic stimulus measures, Asian countries will have to continue to deal with huge foreign capital inflow.

UN secretary-general Ban Ki-moon, left, joins Prime Minister Abhisit Vejjajiva at a news conference on Oct 26 at Government House. Mr Ban’s one-day official visit to Thailand was part of a four-nation Asian tour which includes Cambodia, Vietnam and China. APICHART JINAKUL

"When I met United Nations secretary-general Ban Ki-Moon yesterday he told me that the coming G20 summit should help ease the situation," he said.

The prime minister said the country's agricultural sector and domestic trade had been hit by natural disasters. It was necessary for the government to react to drought situations and the current heavy flooding more promptly, as they occurred so quickly.

Commenting on politics, he said there were still attempts by some groups of people to create unrest in the country.

"I can assure you that there will be a general election next year, because I don't think the government will complete its term.

"I have made it clear that I would be willing to lose an election if it brings peace to the country. It is better than winning an election that would lead to violence," Mr Abhisit said.

As for Map Ta Phut industrial estate and 3G investment problems, he said they were related to politics and the constitution and the government must find ways to solve them.

"The government has set three goals, which are increased economic competency, ensuring public security through the welfare system, and promoting economic fairness," he said.

Next month, the government will revise the price structures of energy and agricultural products to prevent their prices from rising unfairly, he said.

Mr Abhisit and his delegation are scheduled to leave for Vietnam tomorrow to attend the 17th Asean summit to be held in Hanoi from Oct 28 to 30.

BoT former governor and ex-finance minister Pridiyathorn Devakula

Bank of Thailand (BoT) former governor Pridiyathorn Devakula said the central bank should tax principal investment in the bond market to delay foreign capital inflow and help curb the baht’s value.

MR Pridiyathorn said the baht would continue to strengthen for another one and half year to two years due to the weakening US dollar stemmed from the US economic stimulus measures.

There were signs of massive capital inflow to benefit from the high bond rate and this had led to a problem of excessive liquidity in the system. It had also strengthened the Thai currency, he said.

A tax policy on investment in the bond market should be introduces to stabilise the Thai currency to maintain the trade competitiveness of the export sector.

If Thai exporters failed to stay competitive, exports would drop markedly and that would hurt the country’s future economic development, the former BoT chief said.