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BankThai raises economic growth estimate to 3.9 percent

No need to intervene in baht movement, says BOT

Analysts upbeat for year 2003

BankThai raises economic growth estimate to 3.9 percent

BankThai Plc has raised the country’s economic growth estimate for 2003 to 3.9 percent from an earlier projection of 3.7 percent. Dr. Anusorn Thammajai, senior vice president of the bank’s Research and Planning Division, said the bank believes the higher projection was realistic if the global economic situation remains stable. He added that should the world economy expand at the rate of 3.7 percent, the Thai economy could likely to grow 4.6 percent.

Dr. Anusorn projected that consumption, service and investment will play a key role in driving the continued economic growth in through the year 2003. In his view, deflation should be ruled out in the next six months.

The property, construction, tourism, automobile, precious stone and ornament industries are predicted to see continued growth and external economic stability is thought to improve unless war between the United States and Iraq breaks out.

Thailand’s international reserve is expected to increase while foreign debts are projected to drop further.

The senior banker said the country will continue to enjoy a trade surplus of around US$2.5-3 billion and a current account surplus of $5.4 billion. Given sustained economic fundamentals, the baht is expected to steadily strengthen.

The export was forecast to grow 4.8 percent during the next year and the import to expand 6 percent. However, the slowdown in the US and Japan economies will remain key risk factors for Thailand’s export.

The excessive liquidity in the banking system has declined while lending expanded slightly during 2002 and is expected to grow during 2003.

It is believed the US Federal Reserve will not raise interest rates in the first 6 months of 2003; therefore the Bank of Thailand will most likely keep repurchase rates unchanged in during that period.

Dr Anusorn was upbeat about the stock market direction, saying the index could rise to 514 points in 2003 with the price/earning ratio of 10 times. In his view the Stock Exchange of Thailand could be one of the bourses in the region that could give investors attractive returns. (TNA)

No need to intervene in baht movement, says BOT

Bank of Thailand’s governor, M.R. Pridiyathorn Devakula is again stressing that the central bank sees no need to intervene in the baht movement for now, saying the local currency remains stable.

He said the baht had still appreciated in a reasonable and acceptable level partly because the dollar had significantly weakened on the back of economic uncertainties in the United States.

The BOT governor said the baht has become stronger in accordance with other regional currencies; however the central back will continue to closely monitor and supervise the baht movement.

Given affected factors and conditions, the BOT views it unnecessary for the moment to intervene or take any particular action to lessen the stronger baht. What the bank wants to do now was to supervise the baht to curb severe fluctuation and ensure it moves in line with the market mechanism. (TNA)

Analysts upbeat for year 2003

Economic analysts are predicting that Thailand’s economy will continue to grow providing the government tackles some issues that have been dragging out. The National Economic and Social Development Board (NESDB) projects a conservative growth forecast for this year of 4.0 to 4.5 percent.

The cautious prediction takes into consideration one of the downside risks the economy faces this year. Although Thailand’s export has been a big contributing factor the economy will probably not be boosted by outside capital.

There is a possibility that Thailand’s trade balance could, in the near future, turn negative. Imports have risen from US$12.9 billion (558 billion baht) in the second quarter of last year to $18.2 billion in the third quarter and then in October 2002, to $15 billion, and have definitely contributed to growth. The downside may be that this growth may come at the expense of the trade balance if import demand continues.

The possible trade deficit is not necessarily a negative outlook since industrial productivity has been rising steadily, increasing 4 percent in the first quarter, 7.8 percent in the second and 10.6 percent in the third.

If the import of capital and rise in industrial productivity work in tandem the imported capital can be used effectively. This scenario allows the economy to achieve promising levels and can signal sustained growth for the country.

There is more good news on the horizon. Thailand will, after careful deliberation, pay back its IMF debt earlier than scheduled. There is also the completion of the Thai Asset Management Corp’s task of restructuring 338.05 billion baht of non-performing loans, (NPLs) left over from what was a total of 717.65 billion baht.

Thailand also has sustained its political stability and friendly investment climate. In all the analysts are optimistic that 2003 could be a year of continued and sustained economic growth. (TNA)