NESDB boosts growth forecast to 5.5-6.5%

“We have raised our economic-growth forecast to between 5.5 and 6.5 per cent this year, from the range 4.5-5.5 per cent projected previously,” Arkhom Termpitayapaisit, secretary-general of the state think-tank, told a news conference.
The NESBD chief said the upward revision was attributable to increasing public and private investment in post-flood reconstruction.
Importantly, the higher growth rate is based on the assumption that there will be no repeat of the severe flooding this year, he said.
The government will spend Bt120 billion for repairing sluice gates, digging canals for drainage, building reservoirs to store water and compensating flood victims, he said.
This would ensure that if up to five storms were to strike the country again this year, flood damage would be minimal, he added.
“We have not yet taken into account a government plan to spend [another] Bt350 billion for flood-prevention measures, as [a ruling on] the executive decree is pending in the Constitution Court,” Arkhom said.
Public investment is projected to expand by 13 per cent, against an 8.7-per-cent contraction last year. Private investment is forecast to expand 14.5 per cent, double last year’s 7.2-per-cent increase.
The manufacturing factor, which suffering hugely as a result of last year’s devastating floods, will fully recover in May or June, the NESDB predicts.
As of February 15, some 44 per cent of 838 factories in seven inundated industrial estates had returned to full operations. Forty-one of the plants were relocated to other sites.
Meanwhile, 78 per cent of 1,581 flood-affected factories located outside these industrial parks had also returned to normal production.
Arkhom added that a recovery in exports and consumption would also support growth this year.
Private consumption is expected to increase by 4.5 per cent, compared with 1.3 per cent last year, while public consumption will expand 3.5 per cent against 1.4 per cent last year.
Goods exports are projected to grow by 17.2 per cent in dollar terms, versus an import expansion rate of 24.3 per cent.
NESDB data show that gross domestic product contracted by as much as 9 per cent year on year in the final quarter of 2011, because of the drastic fall in the manufacturing sector. This was in stark contrast to a 3.7-per-cent GDP increase in the third quarter. The final-quarter slump brought down the 2011 economic growth rate to just 0.1 per cent, Arkhom said.
The NESDB expects this year’s inflation to come in at 3.5-4 per cent, against 3.8 per cent last year, because of high food and oil prices. This is based on the price of crude oil averaging US$105-$110 per barrel over the year.
Thailand is expected to maintain a current-account surplus equivalent to 1.2 per cent of GDP. Last year’s surplus accounted for 3.4 per cent of GDP.
Downside risks this year include the impact of the sovereign-debt crisis in the euro zone, high oil prices, highly volatile global financial markets and labour shortages, Arkhom added.
In February, the Bank of Thailand projected a 4.9-per-cent growth rate for the economy this year.
Kasikorn Research Centre said the economy would start to recover during this quarter, with full-year growth estimated at 4.5-6 per cent.