GDP to grow just 4.5%: World Bank

This is despite the Thai manufacturing sector recovering fully in the second half, the institution said.
At yesterday’s “Looking at Thailand and the Global Economy in the Second Half with Economic Gurus” seminar, panellists warned that both Thai gross domestic product and the world economy would experience slower growth in the next several years. They advised Thai enterprises to adapt their marketing plans urgently to focus more on new potential markets and increase productivity and competitiveness, as demand from traditional markets would continue to shrink.
Kirida Bhaopichitr, senior economist at the World Bank, said the European Union’s economy would take more than five years to recover from the euro-zone crisis.
“The euro crunch is quite critical and has created a euro-zone-wide impact. It will take longer than the ‘Hamburger’ or ‘Tom Yum Kung’,” she said, referring to the 2008 US-led meltdown and the one in 1997 that began in Thailand.
The World Bank predicts that Thai GDP this year will grow by only 4.5 per cent, because of the continued impact of last year’s flood crisis.
Although the manufacturing sector will be fully operational in the second half, the impact of the euro crunch will hit exports and the country’s growth over the rest of the year, she said.
The World Bank also forecasts that Thai exports will expand by only 10.4 per cent this year, well below the target of 15 per cent. Kirida added that Thai GDP was expected to grow by just 5 per cent next year on concerns over lingering slow growth in the euro-zone and global economies.
To cope with the slowdown, Kirida suggested that the government provide short-term measures to help enterprises and workers hit by the effects of the euro-zone crisis.
The authorities should also focus more on promoting service-sector growth, as it will be the major new engine driving the economy, instead of exports, she added.
The service sector now creates about 48 per cent of GDP and contributes about 50 per cent of the country’s workforce.
Sutapa Amornvivat, chief economist at the SCB Economic Intel-ligence Centre, warned of a high risk of Thai exporters facing payment problems with European trading partners. Exporters will also face higher financial-transaction costs, as they should open letters of credit to guarantee payment, she said.
Virachai Vongbunsin, director of human-resource development and organisation development at Master Group Corporation and committee member of the Board of Trade of Thailand, said the global economy was facing great uncertainty in the second half of the year.