Be cautious in case euro crisis drags

This euro crisis could go on for five more years, he told a seminar on building Thailand’s wealth in the next decade organised by Kiatnakin Fund Management.
Thailand’s export sector shows a tendency to become weaker in 10 years, so the government has to set a clear strategy to strengthen it and set clear goals on which export segment it will support.
It also has to strike a balance between the export and domestic sectors, Somkid said.
It will be difficult to build wealth in the next decade as the global economic slump will last for four or five years and it will take at least four of five more years for the recovery.
The government should increase purchasing power at the grass-roots level by instituting genuine agricultural reform, not just launching piecemeal policies such as the rice-pledging scheme, which could help the sector only temporarily.
The government should invest in the creation of value-added products and set up industry clusters. It should also formulate a long-term national strategy to promote industry with the focus on innovation to add value to industrial products, he said.
Suphawut Saichua, managing director for research at Phatra Securities, said the euro-zone crisis remained a risk factor for the Thai economy, so growth in the rest of this year would be more sluggish than in the first half.
The outlook for the economy next year is for further slowdown even though the European Union has attempted to launch solutions to help sustain its economy.
The securities house expects the European economy this year will drop by 0.7 per cent and the US economy next quarter will expand by only 1 per cent.
The export sector cannot avoid the uncertainties in the United States and the euro zone, so the Kingdom’s gross domestic product this year should rise by 5 per cent.
GDP next year is expected to grow by 4.5 per cent – lower than this year because of waning domestic purchasing power.
Purchasing power this year is being buoyed by the first-car scheme, so the government needs to boost GDP by infrastructure investment such as the flood intervention and high-speed-rail projects.
The government should join forces with the Myanmar government to increase the investment of both countries.
The Middle East situation remains a worry for investors, as it will push up the global oil price and pressure inflation.
In case inflation is fuelled by oil prices, the Bank of Thailand cannot slash the policy rate, he added.