The Thai economy is forecast to expand by only 3.2
percent, the lowest level in Asia in the past five years, dropping from last
year’s economy, which grew by 7.5 per cent, Frederico Gil Sander, World Bank
economist in Bangkok said on Thursday.According to the World Bank’s latest
‘Global Economic Prospects 2011,’ Mr Sander said that last year’s Thai
economic growth marked the highest level in Asia but the Gross Domestic
Product (GDP) in the third and fourth quarters of 2010 gradually declined.
Meanwhile, the country’s tourism sector has not yet fully
recovered due to the small number of tourist arrivals from US and Europe.
Owing to the economy in the last two quarters of 2010 and slow recovery of
tourism industry, the World Bank forecast that the GDP in 2011 is unlikely
to expand by 5 per cent in accordance with its potential growth rate, but
will slow to 3.2 per cent, the lowest economic growth in Asian countries.
Mr Sander also said last year has seen the large and most
volatile foreign capital flows. However, he expected that the US government
will apply measures related to capital injection to boost its economy for
gradual recovery. This will lead to a decline in foreign capital inflows in
contrast with last year’s surging capital flows and that will help stabilise
currency exchange rates across Asia as well as for the Thai baht.
Regarding Thailand’s political uncertainties persisting
for years, the World Bank economist said the factor does not markedly impact
on investor confidence. On the contrary, this year’s planned general
election will likely encourage domestic consumption and the government’s
‘Pracha Wiwat’ (People’s Agenda) welfare scheme will stimulate domestic
spending as well.
He also pointed out that a risk to Thai economy in 2011
is European debt crisis which remains unstable and fragile, adding that if
the situation worsens, it will cause negative impact on Thailand’s economy.
Moreover, faster-than-expected high inflation rate should be concerned. If
the central bank’s Monetary Policy Committee raises the policy interest rate
too quickly, it may cause a stagnation in domestic demand and later may
affect the overall economy.
However, if the political situation is more stable or
otherwise sends a positive signal, the World Bank may raise Thailand’s
economic growth in 2012 to 4.2 per cent, Mr Sander explained (MCOT/TNA)