Growth forecast raised to 5.7%

“This year, the Thai economy is growing well, partly because of last year’s low base. The main cause is the government stimulus that resulted in higher consumption. The government’s disbursements and private investment were also better,” Somchai Sujjapongse, director-general of the FPO, told a news conference.
Gross domestic product this quarter is expected to expand 15 per cent from the last quarter of 2011.
However, next year’s growth forecast was lowered to 5.0 per cent from 5.2 per cent to reflect greater risks, particularly the global economic recovery and capital movements.
The FPO affirmed the strong status of state-run banks, pointing out their capital-to-risk assets ratio of 10.2 per cent and rate of non-performing loans of 4.5 per cent.
Value-added-tax collections remain an indicator of strong demand, with 29.7-per-cent growth last month over November 2011. Sales of new passenger cars surged 509 per cent and commercial-vehicle sales soared 400 per cent.
In November, Thai exports hit this year’s high with a 20.9-per-cent increase year on year. This was a good sign for next year, Somchai said.
Tourist arrivals are expected to hit 22 million this year.
“However, this year’s exports have slowed down on the global economic sluggishness and delays in the recovery in some [of Thailand’s] industries. The FPO lowered its projection for Thai export growth to 3.9 per cent from the previous estimate of 4.5 per cent,” he said. In 2013, GDP growth could be driven by consumption and private investment with support from government measures, including the minimum-wage increase, corporate-income-tax cut and scaled-up public investment.
The 2013 growth estimate excludes the government’s planned infrastructure investment of Bt2 trillion. In the preliminary estimate, about Bt100 billion worth of investment is expected for the plan and that could raise the GDP growth rate by 1 percentage point.
In 2013, imports are expected to grow by 3.5 per cent and exports by 3.3 per cent.
The 2013 growth estimate assumes a 3.9-per-cent economic expansion in 14 major trading countries and a climb in the crude-oil price to US$113 per barrel on mounting demand in China and emerging countries.
The policy rate is forecast to stay between 2.25 and 3.25 per cent next year. Public expenditures are budgeted at Bt3.17 trillion.
Risks to next year’s GDP growth include the global economic recovery, the Bank of Thailand’s supervision of capital flows, the government’s budget disbursement and the likelihood of more severe droughts. Others are elections in Germany and Italy, disputes between China and Japan, economic imbalances in the Middle East, and progress in US negotiations on its “fiscal cliff” of tax hikes and spending cuts.
The FPO will continue to monitor some state banks, including the Islamic Bank of Thailand and the Small and Medium Enterprise Development Bank of Thailand, as their performances require close tracking, Somchai said.
“The state-run banks’ bad-debt level remains low and cannot bring down the economic system. The Bank of Thailand also conducts annual examinations. From now on, the FPO will make announcements on the state-run banks every three months,” he said.