Quick recovery seen but euro crisis a worry
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The economy could recover rapidly from the recent inundation and resume pre-flood growth of 5 per cent this year thanks to private spending and bank lending, Bangkok Bank's chief economist said yesterday.
Flood-management investment and foreign direct investment will also support growth over the next few years, executive vice president Kobsak Pootrakool told a seminar on the Thai economy amid the euro-zone crisis and the recovery from the flood.
Many countries that were hit by natural disasters proved that they could bounce back, and Thailand is the same, he said. It can quickly pick up the pace in the first half of this year with the support of spending by the private sector and lending by state-owned banks and commercial banks to help their customers financially.
The Bt300-billion soft-loan programme to help flood victims is an example of lending to enhance the economy.
The benefits from the Bt350-billion flood-management investment for both hardware and software might not be seen in the near future because each project needs time for designing and bidding and the budget is huge.
The flood-prevention project that could materialise is the dyke construction around industrial parks.
The surge in the overall Asian economy is one factor accelerating the Asean economies, including Thailand’s. The results should be visible in three to four years, he said.
To cash in on the growing economy in this region, the government has opened up opportunities for investors by launching mega-projects, mostly for transport and logistics to connect to the Asean road network.
The projects scheduled from 2012-21 will require investment of Bt2.3 trillion, Kobsak said.
Asean welcomes investment by foreign countries, especially China, which wants to develop its southern region. China has allocated huge funds to construct infrastructure and transportation corridors to connect the southern region to Asean countries, he said.
China is facing risk from excess investment, so it has to direct its investment outwards to Asean, and this has increased investment in this region.
Thailand ranked eighth among the 10 Asean countries as a destination of China’s direct investment from 2005-09. China has invested US$447.88 million (Bt14 billion) in Thailand during the period.
Even though the Asian economy is rapidly changing and a window of opportunity is opening for Asean, which will significantly benefit Thailand, the country should be more cautious about the fallout from the European debt crisis, Kobsak said.
Europe’s fiscal frailty is a real threat to the global economy and could hurt Asian trade and growth and foreign-exchange stability, he added.
