GDP not only success factor: Prasarn

The central bank, through its operations, has striven to ensure improvement in the three supporting components, but some flaws remain, he told a seminar on “How GDP Reflects Thailand’s Economic Strength” hosted by the House committee on monetary, fiscal and financial institutions.
In addressing social inequality, there is a stark difference between “give-aways” and true assistance. Handouts are just free gifts and have nothing to do with improving basic services and caring for the needs of the entire population, particularly for access to production factors like land and capital, he said.
Thailand’s 2012 economic growth forecast of 5.7 per cent is moderate, driven partly by the low level last year when supply chains were disrupted by the tsunami and earthquake in Japan and floods in Thailand.
The GDP figure is just an economic indicator but it cannot demonstrate economic strength without the three components. A country needs stable growth, which would lead to long-term competitiveness and a better quality of life, which can be achieved through equal access to basic services.
Stability will be assured if growth is not fuelling speculation or excessive household debts or uncontrolled loan growth. Growth should spread through all parts of the economy, so that one part can support another when an unexpected event occurs.
The GDP growth rate does not reflect competitiveness, as growth could be driven mainly by consumption, not investment. Without improvement in the production process, competitiveness could stall and eventually fall. In the case of Thailand, competitiveness is low compared to GDP, as shown through GDP per capita, which indicates how much an individual contributes to the economy.
“In the International Monetary Fund’s 2011 ranking, Thailand’s GDP was the 31st biggest in the world from 183 countries, but its GDP per capita was 90th in the world,” he said.
The latest IMD World Competitiveness ranking also showed that Thailand fell from 27th last year to 30th out of 57 countries.
The quality of life is about keeping the cost of living at an appropriate level and giving people equitable access to basic necessities, he said, adding that the GDP growth rate cannot reflect this qualitative aspect.
“If an economy is to demonstrate strength, economic and social inequality must diminish. Inclusive growth must be warranted with equal access to basic services like education, healthcare, legal protection and funding,” he said.
All policymakers should join hands in leading the economy on a sustainable growth path, which should ensure a decent quality of life for all and also strengthen the economy from inside out, he added.