Govt stimulus, Asean growth to push Thai GDP

Giving a special speech on "Direction for Thai Economy in 2013" yesterday, Kosit said growth in the Kingdom was expected to be close to that in 2012 because of short-term fiscal stimulus and long-term growth in Asean countries.

BBL estimates that Thai gross domestic product will expand by 4-5 per cent, while the Fiscal Policy Office (FPO) forecasts 5.2 per cent in 2013. The Macroeconomic Policy Bureau expects growth of 5.2 per cent, close to the estimate for this year.

Boonchai Charassangsomboon, executive director of the Macroeconomic Policy Bureau, said next year could see domestic consumption and public and private investment drive the economy, while exports might see a recovery.

However, Kosit urged the government to be cautious with the budget. If a large amount of is used for economic stimulus, the government may face a high budget deficit, an increase in public debt and, in the long term, economic problems.

Meanwhile, Thailand needs to make adjustments to cope with regional changes.

Next year, the country could confront external risks from uncertainties over solutions to economic problems in the United States and the European Union.

"It may take 10 years for the US and European economies to pass through their transition. This may affect international trade. There is also no capital-market stability," Kosit said.

Other external risks next year are conflicts in Israel, Iran and Syria, Asean’s rising role, and natural disasters.

To prepare for such possibilities, Kosit suggested that Thai industry advance its competitiveness in investment and human resources through research and development, and build up business alliances for innovation and business opportunities.

Kobsak Pootrakool, BBL executive vice president, said the US "fiscal cliff" remained an uncertainty in the coming months and could lead to solutions to the US fiscal burden in the long term. However, it could take at least three years to solve the United States’ economic problems and at least five years to resolve the European economic crisis.

The next five years will be vital for growth in Southeast Asia as the public and private sectors in several Asean countries prepare for domestic and overseas investment expansion, he said.

"There is an opportunity for Thailand to grow its economy through trade with regional countries. Thai exports to Myanmar, Laos and Vietnam now amount to 70 per cent of the level of Thai exports to the US. Thai export to these countries is growing by 22 per cent per year while those to the US expand by 2 per cent.

"The next five years will be the time for foreign investment. And we should not have severe political problems," Kobsak said.

Somchai Sujjapongse, director-general of the FPO, said Cambodia, Laos, Myanmar and Vietnam (CLMV) could play a vital role for Thailand. Thai exports to CLMV now account for 6.9 per cent of the total, and this figure is expected to rise.

The FPO has forecast Thai export growth this year at 4.5-5 per cent. For next year, export growth is projected at 10.2 per cent.

Udom Wongviwatchai, secretary-general of the Board of Investment, said the value of foreign investment approved by the BOI stood at Bt826 billion for the first 10 months of this year and the whole 2013 figure was expected to touch Bt1 trillion for the first time.

In 2013, foreign direct investment in Thai industry is likely to continue, thanks to high growth and political improvement in Asia, the US and European economic woes, political conflicts between China and Japan, likely investment of Japanese small and medium-sized enterprises in Thailand, and BOI measures to provide more support to target industries next year, Udom said.

The target industries include special-technology textiles, plastic, automotive, electrical items and electronics, and environmentally friendly products.