More needed to boost economy
The government may need to inject more money into the economy and the Bank of Thailand may need to ease monetary policy further to boost economic growth next year, while some large listed firms are expected to perform well, say market analysts.
Thailand’s exports are expected to slow next year because of the weakening of the global economy. Europe’s economy is expected to enter recession and contract 0.5 per cent next year, Santitarn Sathirathai, a Credit Suisse economist specialising in research on Southeast Asia and India, said yesterday.
If the world economy faces a financial crisis as in 2008, Asia will not be immune, he said at a seminar on the economic and market outlook in 2011-12.
He expects China to manage a soft landing with a growth rate of 8-8.5 per cent in gross domestic product. But China’s economy would also be affected by a global slowdown. Among Asean countries, Indonesia has gained a lot from exporting commodities to China.
“A slowdown of our exports would also drag down domestic consumption and investment,” he said.
Santitarn did not agree with other research houses that predicted higher growth next year due to post-flood reconstruction. The National Economic and Social Development Board forecast GDP growth of 4.5-5.5 per cent next year, while the central bank predicted 4.8 per cent.
“To achieve such a high growth rate, the central bank may have to do more, and the government would also need to spend more on investment,” he said.
The Bank of Thailand recently cut the policy rate by 25 basis points, while the government plans to run a fiscal deficit of Bt400 billion because of the high investment needed for post-flood reconstruction.
Santitarn said that looking back a few years, the central bank had increased the policy rate substantially compared with other central banks in the region.
Though the economic outlook is not bright, Adithep Vanabriksha, chief investment officer at Aberdeen Asset Management Co, said some large listed firms would perform well.
He said Aberdeen still overweighted the Stock Exchange of Thailand. Though the country has faced many turbulent events, including political and global financial crises, these firms have proved resilient.
Among the top 10 companies are Siam Cement, Siam Commercial Bank, Kasikornbank, Tisco Financial Group, PTT Exploration and Production, and Advance Info Service, Adithep said.
