Govt programmes to slow export growth: Fiscal Policy Office

Rising wages and higher rice prices are expected to decelerate export growth next year, the Fiscal Policy Office says, while lowering its economic-growth forecast for this year to 4 per cent because of the threat of continuing sluggishness in the global e

The government policy to increase minimum wages to Bt300 per day and its rice-subsidy scheme are expected to raise Thailand’s export price index to 7.5 per cent next year from 7 per cent this year, said Boonchai Charassaengsomboon, director of the macroeconomic policy bureau. The rice-pledging scheme aims to raise the price of white rice as high as Bt15,000 per tonne, which would lead to lower supplies in the global market, resulting in a higher price of Thai products, he said. Export growth next year is expected to be 13.7 per cent year on year, slower than this year’s 22.3 per cent, partly affected by higher prices of Thai products. "However, at the moment we cannot pinpoint exactly how much export growth will be affected by higher prices of Thai products," Boonchai said. He said growth in gross domestic product this year was estimated to be 4 per cent, decelerating from 7.8 per cent last year. The new forecast is also slower than the range of 4-5 per cent projected in June. The threat of double-dip recessions in the United States and Europe caused the office to lower its GDP growth projection, he said. In Thailand, private consumption is expected to expand 3.9 per cent this year, decelerating from 4.8 per cent last year. Private investment would expand 11.3 per cent, slower than 13.8 per cent last year. Public investment is expected to contract by 1.4 per cent, slightly improving from the 2.2-per-cent contraction last year. Damage from flooding is estimated to be between Bt20 billion and Bt40 billion, he said. The Fiscal Policy Office forecasts GDP growth next year at 4.5 per cent, based on the assumption of an improving global economy. The office expects average GDP growth of 14 trade partners will be 3.5 per cent next year, up from an estimated 3.2 per cent this year. "However, uncertainty over the global economy remains on the top of the list," Boonchai said. The government’s consumption-driven policy will also affect growth, depending on the scope of its implementation. Capital inflows and outflows will also affect the baht, which in turn will affect export performance. Though the baht currently is weakening because of capital outflow, the office projects that the currency will strengthen to 30 per US dollar next year, from 30.5 per dollar this year. Japan is expected to recover fully in 2012 from the effects of this year’s tsunami disaster, which will boost Thailand’s exports. The Bank of Thailand’s policy interest rate is expected to rise to 3.75 per cent next year, from 3.5 per cent currently. Meanwhile, headline inflation is expected to slow to 3.3 per cent next year from 3.8 per cent this year.

Govt programmes to slow export growth: Fiscal Policy Office

Rising wages and higher rice prices are expected to decelerate export growth next year, the Fiscal Policy Office says, while lowering its economic-growth forecast for this year to 4 per cent because of the threat of continuing sluggishness in the global e

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