Huge flood toll
The Thai economy may contract as much as 3.7 per cent in the fourth quarter of this year, which would pull down the full-year growth to only 1.4 per cent, according to University of Thai Chamber of Commerce.
Thanavath Phonvichai, director of the university's Centre for Economy and Business Forecasting, said today that the econmy would start to recover in the second half of next year largely driven by public investment and domestic consumption.
Gross domestic product is expected to expand 4.7 per cent next year.
Unlike some economists' expectation that global factors would force the Bank of Thailand to cut the policy rates, Thanavath foresees an increase by 50-75 basis points next year as inflation heightens.
He said that if the world economy recovers, inflation will accelerate as oil prices would stay over US$100 per barel.
"The weak global economy remains risk to growth but a chance that the world economy would experience another crisis next year would be as small as 25 per cent," he added.
Despite political wrangling on several issues, he does not expect severe political instability next year.
